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Wednesday, 1 September 1937

Senator Sir GEORGE PEARCE (Western Australia) (Minister for External Affairs) [3.45]. - I move -

That the billbe now read a second time.

The purpose of this bill is to increase to£ 1 a week the maximum rate of invalid and old-age pensions. It will be recalled that in 1931, when the financial position made it necessary for expenditure to be curtailed, the maximum rate of pension was reluctantly reduced from£l to 17s. 6d. a week. The resultant sacrifice was accepted with commendable fortitude by the greatbody of the pensioners, and this large section of the community has the gratifying knowledge of having made a valuable contribution to the rehabilitation of the country's finances. The reduction was, of course, a temporary one, and the Government has had constantly bef ore it the objective of restoring pensions to their original rate as soon as the financial position permitted. In pursuance of this policy the present Government increased the maximum pension to 18s. in July, 1935, and again to 19s. a week in September, 1936. After a careful survey of the financial position, the Government believes that it is now warranted in making available the final instalment of the amount which is equivalent to the reduction made in 1931, and it is privileged to present to Parliament proposals for the restoration of pensions to the previous maximum rate of £1 a week, with a corresponding increase of the limit of income plus pension.

I propose briefly to review the various changes of the maximum rate of invalid and old-age pensions since the first payments were made in 1909. The maximum rate of pension was then 10s. a week. In October, 1916, the Hughes Labour Government raised the pension to 12s. 6d. a week. That was followed, in January, 1920, by an increase to 15s. a week made by the Hughes Nationalist Government. In September, 1923, a further increase was made by the Bruce-Page Government, the new rate being 17s. 6d. a week. Then, in October, 1925, the Bruce-Page Government raised the pension to £1 a week, and that amount continued until July, 1931, when, owing to the financial position of the Commonwealth, the Scullin Government found it imperative as part of the financial emergency legislation to reduce the maximum pension to 17s6d. a week.

In October, 1932, the financial position demanded further emergency legislation, and the Government found it necessary to reduce pensions by not more than 2s. 6d. a week in certain cases in which the pensioners possessed income. In. October, 1933, as part of its financial relief measures, the Government fully restored the pensions to the rate at which they stood prior to the reductions made in 1932, and at the same time introduced into the Invalid and Old-age Pensions Act provision for a yearly review of the maximum rate of pension on the basis of the price index number for food and groceries for the twelve months ending 31st March in each year, and for a variation of the maximum Tate by 6d. a week, according to each rise or fall of IGO points in the index number. The table then inserted in the act fixed the maximum pension at 17s. 6d. a week, with provision for increases, on a sliding scale, until the price index number should reach 1,800, when the maximum pension? would reach £1 a week. In accordance with that table the maximum rate of pension was increased from 17s. 6d. to 18s. a week from the 4th July, 1935, based on the price index number of 1,412 as at the 31st March, 1935.

In September of last year the Government liberalized the law by substituting a new table of price index numbers under which the then pension of 18s. a week would be further increased according to rises of the price index number until the pension would reach £1 a week at 1,640, instead of at 1,800, as in the previous table. The immediate effect of the new table was the increasing of the maximum rate of pension from 18s. to 19s. a week, based on a price index number of 1,44S. That increase came into operation on the :24th September, 1.936. The price index number for the year ended the 31st March, 1937, was i,491 which, under the existing provisions of the law, did not permit of any increase of the pension above 19s. a week. The Government now proposes, however, to amend the law so as to provide specifically for a pension of £1 a week, and to repeal the whole of the provisions relating to the variation of the pension according to the price index number.

I should like specially to direct the attention of honorable senators to the fact that the Government's proposals provide a further concession to invalid and old-age pensioners, inasmuch as not only will the pension be increased to £1 a week, but also the removal of the provisions regarding price index numbers will mean that never again will the- pension fall below that amount without the express sanction of Parliament. As a result of this legislation every pension in- force will bc increased by 2s. a fortnight. The number of pensioners who will benefi t from this legislation is just over 300,000, and the additional financial liability which will be incurred by the Commonwealth is estimated at £800,000 per annum. The effect on the budget for the current year will be approximately £600,000, making the total estimated expenditure for the- year on invalid and old-age pensions £15,900,000. This represents an increase of nearly £2,000,000 over the expenditure for last year, and will be the highest amount paid in any one year since the Commonwealth commenced to pay pensions in 1909.

The bill also makes provision for an increase of the limit of income plus pension to £84 10s. per annum, or 32s. 6d. a week. Ever since 1923 the law has allowed a pensioner to have an income of £32 10s. per annum - 12s. 6d. a week - without the rate of his pension being affected. Under the new provisions the pensioner will still be allowed to have an income of 12s. 6d. a week as well as a pension of £1 a week, or a total of 32s. 6d. a week instead of 31s. 6d. a week as at present. The income plus pension limit of £84 10s. per annum, or 32s. 6d. a week, will thus return to the amount which was in operation in the predepression years. Never at any time have the income provisions been more liberal.

The limit of income inclusive of pension in the case of blind pensioners was increased in January, 1921, by the Hughes Nationalist Government from £65 per annum, which was then the limit for other pensioners, to £221 per annum, or £4 5s. a week. In July, 1935, the limit for blind pensioners was automatically increased to £222 6s. per annum - £4 5s. 6d. a week - as the result of the general increase of pensions by 6d. a week under the scale of price index numbers, and in September of last year the limit was further increased to £224 18s. per annum - £4 6s. 6d. a week - following the general increase of pensions by ls. a week. Under this bill the income Limit for blind pensioners will be further increased by ls. a week to £4 7s. 6d. a week, or £227 10s. per annum.

I should particularly like to point out that, with the exception of the' second quarter of 1931, when the rapid fall of prices . had increased the purchasing power of the pension to its highest level, the new pension rate of 20s. a week will give to invalid and old-age pensioners throughout the Commonwealth a greater purchasing power than they have ever had since the introduction of Commonwealth pensions. The reason for this is that 20s. to-day will purchase what 23s. lOd. would have purchased in 1925, when the pension was first increased to 20s. a week, and what 22s. 2d. would have purchased in 1930, which was the last full year in which the pension was 20s. a week.

The bill also provides for an increase of the amount of pension payable to pensioner inmates of institutions. Honorable senators will call to mind that in September of last year the Government increased the amount of benevolent, » asylum and hospital pension from 5s. to 5s. 6d. a week, thus restoring to these pen.sioners the amount of pension which they received prior to the financial emergency legislation of 1931. It is proposed that the forthcoming increase of ls. a week shall bo divided equally between the pensioner and the institution, so that in future the pensioner inmate will receive- 6s. a week for his personal use, and the institution will be paid 14s. a week for his maintenance, instead of 13s. 6d. a week as at present. The amount of benevolent asylum and hospital pension will thus be greater than at any previous stage in the history of Commonwealth pensions. Approximately 5,000 pensioner inmates of institutions will benefit by this increase.

As already indicated, the pensions liability during the current year will reach the highest amount yet expended on this service, namely, £15,900,000. The Government realizes that this is a very heavy burden to be borne by the taxpayers of the Commonwealth, but it feels that the people of Australia will cheerfully shoulder that burden in the knowledge that this large expenditure is bringing some measure of happiness and contentment to many thousands of their less fortunate fellow citizens in the eventide of their lives. I, therefore, urge honorable senators to facilitate the passage of the hill in order that the proposed increase may be made available from the next pension pay day.

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