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Thursday, 13 September 1973
Page: 1018


Mr WILSON (Sturt) - I rise to speak in this debate on the issues contained in this Social Services Bill. The Opposition supports the Bill but there are certain features of it which give us cause for concern. One that the honourable member for Perth (Mr Berinson) has dealt with is the question of the phasing out of the age tax allowance. The honourable member seeks to justify this upon the basis that this remedy had to be taken in order to achieve equity between the pensioner and the young family man. He shows a rather strange twist of logic in the way he tackles the problems. I think the way the problem should have been dealt with was for the tax threshold, as it applies to the young family man, to be lifted. Yet if one looks at the report of the Coombs task force one sees that there is some suggestion that the Government is looking at the question of lowering the income at which young family men shall begin to pay tax. The twist of logic is made even stranger when the honourable member compares the tax position of the means tested pensioner and does not look at the position of the pensioner now to receive a means test free pension.

In view of the logic advanced by the honourable member every means test free pensioner should be gravely worried that the approach of this socialist Government will be on a future occasion to take away the benefits conferred upon them this year by lowering in next year's Budget the tax threshold to the means test free pensioner because the means test free pensioner is, by virtue of the pension granted to him, to be made properly substantially better off and his means test free pension is to be treated as part of his taxable income. We have no objection to this. We believe that pensions paid on a means test free basis should be treated like income from every other source. But what we object to is the double taxation that is applied to those who are still subject to the means test.

There have been occasions where we have looked at the application of the means test as though it were operating as a tax. What we do on that occasion is to assume that every pensioner is entitled to the full pension and to treat the operation of the means test as the application of a tax. There are pensioners who have very little in the way of assessable assets but who are receiving a superannuation pension, of very meagre proportions in many instances. On the assumption that a single pensioner has no means as assessed in a capital form his pension is reduced if the superannuation exceeds $20 a week. If that occurs single pensioners are taxed at $50c in the $1 of surplus income by the operation of the tapered means test. They are now to be taxed still further and many of them will be paying a rate of tax higher than the maximum marginal rate of tax being paid by the highest income earners in the land. Yet the honourable member for Perth tells us that the application of tax to these middle income recipients is an application of equitable principles. Equity indeed! It is a taking from those whose means are least in order to pay for the Government's excess expenditure in other areas. It is taking it this year when we are led to believe that next year or the year after they will become means test free pensioners and they will get their pension without this 50c in the $1 tax that applies through the operation of the tapered means test. To me this approach to the problem causes me to question the sincerity of the Government in its promise to abolish the means test.

The Minister for Social Security (Mr Hayden) in his speech talked about the history of efforts to abolish the means test. I, with other members on this side of the House, have striven for many years to achieve abolition and in that striving we may have had significant success. Honourable members on this side of the House have seen the double means test converted into a merged means test, the disincentive features of the merged means test abolished by the introduction of the tapered means test and then a promise in our election policy speech to abolish totally the means test if we had been returned to power. The Minister in his speech makes the pretence that he has supported always the concept of the abolition of the means test. I would draw your attention, Mr Deputy Speaker, to the copies of the Hansard of the early years of the honourable member's time in this House. He was one of the most bitter opponents of those who sought to oppose the abolition of the means test. He argued strenuously for its retention. Yet today-


Mr MacKellar - Who was this?


Mr WILSON - This is the Minister for Social Security, the man who today claims that he was the one who initiated the idea. He has taken up the idea from others and he has changed his ideas. Yet he is not gracious enough to acknowledge that there are members on this side of the House who have fought for this cause and whose efforts have brought about a situation which has enabled him this year in this Budget to introduce a further step towards means test abolition. We need now to look at the proposals of the Minister for Social Security as they relate to the members of the community who today are between the ages of 65 and 75, in the case of men, and between 60 and 75 in the case of women. Although we are led to believe that the means test will be abolished in 2 short years from now, we find a vicious imposition of tax on people whose incomes cannot be regarded as being high.

If there is an inequity so far as the young family man is concerned, there are those of us on this side of the House who have urged for a long time that the tax threshold - the point at which tax first becomes payable - should be looked at across the broad spectrum of all taxpayers and not in the manner in which this legislation is proposed to operate. There will be occasions when the people who today are entitled to a full pension will find that, in the current year, they will be called upon to lodge a tax return and to pay tax. This is in breach of a promise that tax rates would not be increased. I would look at the promises of the Prime Minister (Mr Whitlam) in this regard and ask him to direct his attention to the rates of tax applicable to those aged persons benefiting under the rates scale arising from the age tax allowance. Insofar as that rate scale is to be abolished and a higher rate scale introduced, there has been a breach of promise.

I turn now to another aspect of the legislation before us. It includes a proposal to increase the rate of pension by SI. 50 a week in pursuit of a promise to twice yearly increase the pension at this rate until the time was reached when the age pension became 25 per cent of average weekly earnings. This promise was made in a different economic climate to that which applies today. In making the promise, the Australian Labor Party assured the people that it would endeavour to improve the real incomes of the pensioners. It promised to take the determination of pensions out of the political arena. It indicated that it would do this by relating pensions to average weekly earnings. It promised pensioners that it would increase pensions to a level where they would be equal to 25 per cent of average weekly earnings. Having achieved this goal, Labor claimed that the fixation of pensions would be outside the political arena and not influenced by financial considerations. The Labor Government, by repeating its promise, has endeavoured to create the impression that it has performed. In doing so, it seeks to deceive the pensioners and the public into thinking that it has carried out that promise. It has done neither. Pensions are not index-related and pensioners do not receive 25 per cent of average weekly earnings. Pension increases are not even linked in any way to increases in average weekly earnings.

The Labor Party promised to increase pensions by this regular amount of SI. 50 every 6 months. Events have proved that it is not that amount which is sufficient to meet the target. I wish to illustrate that point. If average weekly earnings are assumed at $100 a week - in fact, they are more than that - and are rising at 12 per cent per annum, pension increases at the rate of $3 a year will do no more than give pensioners increased pensions to take account of the increase in average weekly earnings. It will do nothing to catch up the deficiency which exists - a promise which the Labor Party said it would achieve and carry out. Such an increase of $1.50 a week will not bridge the gap between current pensions and 25 per cent of average weekly earnings. Pension increases continue to depend upon political and financial factors rather than on the welfare of the pensioners.

In the Budget, the Treasurer (Mr Crean) forecast that incomes would rise by 13 per cent per annum. Anyone studying the present inflationary spiral in the Australian economy would be forgiven for concluding that this estimate is likely to prove conservative. But even if incomes were to rise only at the rate forecast in the Budget, pensioners' incomes, at the current rate of increase, are declining as a percentage of average weekly earnings rather than increasing as was the promised objective. In the last session of Parliament, when asked to do something about fulfilling his promise, the Minister for Social Security could only cover up his deceit by personal invective and vague and, as yet, unfulfilled promises that the position would be kept under review. Earlier in this session, in answer to the Leader of the Opposition (Mr Snedden), the Minister again said that the situation would be kept under review. How long will pensioners be kept waiting? They do. not want empty promises of reviews; they want action. They, at a time of rapidly rising prices, want to be able to predict what their incomes are likely to be. Labor has failed to manage the economy effectively and has failed to honour its promise to the pensioners.

The rate at which pensions are being increased is in urgent need of review. It is no good the Minister for Social Security quoting figures based upon last year's intiation rate, or the honourable member for Gellibrand (Mr Willis), who spoke in an earlier debate, basing his figures on percentages in the present pension rates, which are below the level of 25 per cent of average weekly earnings. The pensioners want to know how their incomes will be increased in the light of current inflationary pressures. In his second reading speech, the Minister for Social Security included a table in which he tried to present a rosy picture of the proposition that pensions should be increased at the rate of SI. 50 a week. He tried to do this by deceit. He used 2 techniques in order to try to create the impression that pensions were being increased substantially in real terms. Firstly, in looking at the year ended 30 June 1973, he included the increases provided by the former Liberal-Country Party Government in arriving at his figures for the increase in pensions up to 30 June this year. But it is interesting to look at those figures and to find that the rate at which pensions were increased by the Liberal-Country Party Government for the first 6 months of the year, at a time when the inflation rate was much lower than it is today, was 19.2 per cent on an annual basis. The SI. 50 a week increase that took place in autumn, when pensioners expected an increase immediately following the election and another in the autumn - only the autumn increase occurred - represented an increase on an annual rate of only 16.2 per cent on the existing rate of pension.

The second area in which the Minister for Social Security sought to deceive was to include the Budget increase of SI. 50 a week and then to say that pensions were being increased by 26 per. cent on the previous pension. He asked honourable members to compare an 18-month increase with previous increases based upon 12-monthly comparisons.

He is a strange statistician who this week compared figures related to 18 months with figures relating to a previous period of only 12 months without making an appropriate adjustment for the difference in time. If members of the public are to be misled in this way, what trust can they have in the Government that pensions will ever be increased to 25 per cent of average weekly earnings?

Let us look at the rate of increase that is offered in this Budget and relate it to the actual increases in average weekly earnings. In 1971-72 under the Liberal-Country Party Government pensions for a single pensioner were increased at the rate of 31.3 per cent of the average increase in average weekly earnings. In 1972-73, largely because of the pension increase introduced in last year's Budget by the present Leader of the Opposition (Mr Snedden), the increase in the pension as a proportion of the increase in average weekly earnings based upon a goal of 25 per cent of average weekly earnings was 29.5 per cent. But what of the future? If average weekly earnings increase this year at 11.4 per cent the pension increase will be only at the rate of 24.4 per cent. If the increase is 13 per cent in average weekly earnings the increase in pensions will be at a rate of 20 per cent and pensioners will become progressively worse off.

I challenge the Minister for Social Security to assure pensioners that future increases will be at a rate not less than 25 per cent of the increases in average weekly earnings. Until he does no pensioner can feel assured that he will ever receive 25 per cent of average weekly earnings. We are tired of reviews. We want the assurance that pensions will be increased to keep up with average weekly earnings and an increase should be announced long before next autumn.







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