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Wednesday, 31 July 1946

Mr RYAN (Flinders) .- In consequence of certain remarks made by the' honorable member for Martin (Mr. Daly), my speech will need to be somewhat longer than I had originally intended. I have no objection -to the bill. I believe, however, that in two respects the principles underlying recent social service legislation in this country are unsound. First, no proper contributory system is being established, and, secondly, the means test is not 'being abolished. I have listened with interest to the speech of the honorable member for Martin. His remarks surprised me in some respects. . Like myself the honorable gentleman is a member of the Social Security Committee and has had the opportunity of studying social service legislation. It seems to me that some of his remarks are entirely at variance with information which we have gained as members of the committee. The honorable gentleman said that he approved of the abolition of "the means test. So do I, and so do all other honorable members on this side of the chamber. We shall later set out our views on this subject in considerable detail for the benefit of the electors. " The honorable gentleman referred to .an advertisement in a Sydney newspaper which- outlined the policy of the Liberal party- in regard to social security. The advertisement stated that "The Liberal party maintains that the means test is humiliating and a penalty on thrift ". We heartily agree with that statement. I believe that the honorable gentleman would also agree with it publicly if we were not. on the eve of general elections. The advertisement also stated, " When social services are placed on a contributory basis the means test can be abolished ". That also is true. Some of the remarks of the honorable member in regard to the attitude of honorable gentleman on this side of the chamber on social security measures were quite unnecessary.

Mr Bryson - What 'he said was quite true.

Mr RYAN - In the days gone by nonLabour Governments did a great deal to promote social security in this country. The honorable member for Bourke (Mr. Bryson) "must know that the first social service legislation was placed on our statute-book in 1909 by a government of the political complexion of honorable gentlemen' now sitting on this side of the chamber. For many years and, indeed, until quite recently all the social service legislation "placed on our statute-book was introduced by governments holding views similar to those held by honorable gentleman -now sitting in opposition. It was left to the 'Scullin' Government to reduce pensions in 1929, and although the present Government has been in office since 1940, and has had control of vast public funds, it did nothing to eliminate the means test until the last few weeks. I believe that it has acted now only because we are fast approaching the time when we all shall 'face the' electors. The Government must have realized the need to liberalize its policy. If it had not done so it would undoubtedly have been found wanting by the electors. Honorable members' now sitting on this side of the chamber were instrumental, in 193S, in having passed by ' the Parliament a national health and pensions scheme, but that act was not proclaimed owing to the outbreak of war. Had it been proclaimed, it would at least have given to this country a better basis for social security legislation than it now has. I am somewhat astonished that you Mr. Speaker, did not raise your eyebrows rather more than you did when the honorable member for Martin described as " hypocritical " the attitude of Opposition members towards the means test. I resent that description; because we are at least sincere in promising, not only the introduction of a contributory scheme, but also the abolition of the means test. The honorable member for Martin knows that there are three methods whereby social security legislation may be financed. The Government is adopting the first method, by "soaking" the people at the top, in order to provide for the people at the bottom, of the economic scale. That ia the worst system which any government could apply in any country. I have said previously, and I repeat, that no other country has embraced that principle for the financing of social legislation. The honorable member for Martin should know that. There is something to be said for each of the other two systems. The New Zealand system, of a flat rate tax, provides more security for government finance than does the system here proposed. Finally, there is the contributory system, under which one part would be borne by 'the employer, a second part by the employee, and the third part by the Government out of Consolidated Revenue. That system has been adopted in many countries, including Great

Britain, where the results have been extremely good. I have no doubt that it will be followed in Australia at some time in the future. Under such a scheme, the abolition of the means test would be perfectly feasible. The means test has been abolished in the United Kingdom, and it could be. abolished in this country. Further details of our proposals will be published in the near future. The people will then know that they have within them the means for providing greater security than will be possible under the scheme adopted by the Government.

The bill contains three main features of which I approve. The permissible income is to be raised from 12s. 6d. to £1 a week. For some time, members of the Opposition as well as ministerial supporters have been advocating' this proposal, the adoption of which is long overdue, because the value of the £1 has depreciated veryconsiderably, what was worth 12s. 6d. when the permissible income was fixed at that amount being now worth considerably less.

I next commend the alteration in respect of the property bar to the receipt of a pension. This was raised from the £310 fixed in 1909 to £400 in 1923, at which figure it has remained until the present date. The bill proposes to raise it to £650.

The third feature that I commend is the removal of the disqualification in respect of adult invalids whose parents are deemed to be able adequately to maintain them. The granting of these concessions will somewhat increase the demands on the national revenue. The Minister for Labour and National Service (Mr. Holloway) informed the House that 42,000 pensioners will have their pensions increased, and that 88,000 additional persons will become entitled to the pension, the aggregate amount of which will be increased by £4,250,000, from £29,000,000 to £33,250,000.

Ever since I have been a member of this House, I have held the view that the disqualification in respect of the pension should be on an income, not a capital, basis. Many honorable members know of applicants for the pension who have been debarred from receiving it because their capital has exceeded £400, even though they did not derive any income from it. I cite one case as typical of many cases that have come to my knowledge. An old man had a property in the Mallee district of Victoria, the estimated value of which, according to the Department of Social Security, was approximately £1,000. He derived no income from it, and could not sell it. It was a waste heap of sand, on which there was practically no grass. I have known of three or four similar cases. The owners of the properties could not sell them and had no income from them, yet, under the old system, were debarred from receiving any benefit under the Invalid and Old-age Pensions Act.

I make one further point in relation to the income which may be earned without incurring disqualification for a full pension. At present, an income of£1 a week may be earned by working, or may be derived from an annuity or a small pension. But there are many persons who obtain £1 a week from an investment in Commonwealth bonds or from preference shares. Because they possess the capital which returns them this income, they are debarred to-day from obtaining any bene-, fit under the act. That principle of disqualification because of the possession of capital should be reviewed, with the object of making the disqualification relate to income.Why should a man who receives £1 a week from an annuity or a small pension be more favorably placed than the man who happens to have a few hundred pounds invested in a Commonwealth security which returns a similar income? The granting of this concession might increase the number of persons eligible for the pension; but I doubt very much that it would.

There is one other point; it relates to. the amount of capital which should be regarded as a disqualification. If a man or woman be allowed to have an income of £1 a week and still be entitled to obtain the pension, why should it not be possible to capitalize such an income at, say, 3¼ per cent. per annum, the present government rate, and regard the resultant amount as the permissible capital ? That would raise the capital limit to £1,600. Thrift is still a virtue, and we should do all that we can to encourage it. The time will come when the means test will be abolished. I hope that that will occur before long. But until that time does arrive, there is no reason why thrift should be discouraged as it is being discouraged to-day, by making this benefit dependent almost entirely on the possession of very little or no- capital.

The, principle upon which this legislation is based should be altered so as to allow the points that I have raised to 'be met. I hope' that the Minister will review the matter, with a view to determining whether action may be taken in the directions I have suggested.

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