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Assets test abolition bill introduced into senate



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PRESS RELEASE

Senator Tony Messner Shadow Minister for Community Services

THE SENATE

ASSETS TEST ABOLITION BILL INTRODUCED INTO SENATE

The Hawke Government's failure to act to repeal its assets test which

was inequitable and anomalous and would result in encouraging more and

more people to become dependent upon government had led the Opposition

to introduce assets test abolition bills into both Houses of Parliament.

Senator Tony Messner - the Shadow Minister for Social Security - was

speaking while introducing into the Senate the Social Security and Repat­

riation Assets Test Abolition Bill 1985.

"Over the past two months the rate at which these anomalies - and the

hardship and difficulties they have created - have come to public atten­

tion has increased markedly."

"This is especially true with regard to the test's impact on the rural

community."

"Still there has been no response from the Government and, in particular,

the Minister for Social Security."

"Mr Howe has been quick to criticise both the media and Members of the

Opposition who have highlighted the plight of farmers and others under

the assets test. But what did he expect?,"

"Is he finding the human face of the assets test all so different from

the statistical model upon which it was based? If that is the case then

the Minister has been naive; that naivety should not prevent him from

moving to assist those people who have been caught in the net of the test."

Senator Messner said that the long and sorry history of the assets test

had been of Government inaction to redress mistakes until pushed to the

limit.

"Australians are once again faced with a similar situation."

P.T.O.

"The decision by the Opposition to move to repeal was not taken lightly.

We are opposed to the assets test in principle because it is.designed to

encourage people to become more dependent on governments by discouraging

them from accumulating assets in order to provide as much as possible for

themselves in retirement.1 1

"Our commitment to repeal is so based."

"If the Parliament once again neglects its responsibilities it is condemning

to considerable hardship people who, in their declining years, are unable to

cope with either the rate of change or the details or technicalities of it."

CANBERRA 8 MAY 1985

Contact: Barry O'Farrell (062) 72 6966

SOCIAL SECURITY AND REPATRIATION ASSETS TEST ABOLITION BILL

(1985)

SECOND READING SPEECH

Mr. President,

I move that the Bill be read a second time and seek leave to

have the second reading speech incorporated in Hansard.

The purpose of this Bill is to abolish the assets test on

Social Security and Repatriation pensioners and beneficiaries first announced by the Labor Government in its Budget of

1983/84, finally enacted in September 1984 and which came

into operation on 21 March, 1985. ·

The introduction of this test followed a long period of

confusion within the Government which resulted in many changes and counter-changes to the initial s c h e m e , culminating in the establishment of the Panel of Review into the proposed Incomes and Assets Test - The Gruen Panel - in February 1984 to report

on the form which an appropriate assets test should t a k e .

one indication of the Government's approach to this matter

was that such a review was undertaken a f t e r , rather than

bef o re , an initial scheme was publicly a n n o u n c e d .

This Panel reported to the Government in M a y , 1984 and outlined a scheme whose notable feature was the inclusion of the family home with other assets for the purpose of the test. The

Government did not adopt this part of the recommendations and announced in June 1984 its so-called "modified tall poppies" test which is now embodied in the current legislation.

As I said when introducing a similar Bill earlier this year,

the last eighteen months has witnessed widespread confusion and concern amongst pensioners and beneficiaries at the

intrusiveness many unfair aspects and numerous anomalies

contained in the assets test legislation. While many anomalies have been exposed they have not been corrected by the

Go v er n m e n t . Nor has there been any attempt by the Government to review these, not withstanding there being brought to its attention by Opposition Senators and Members of the House of Representatives, by the media and the individuals c o n c e r n e d . I

I remind honourable Senators opposite that when foreshadowing the establishment of the Gruen Panel in February 1984, Mr.

Hawke admitted that the original legislation contained errors and a n o m al ie s . That legislation would have passed into

legislation three months before that admission had it not

been for the actions of the Liberal and National Parties.

. . ./2

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Over the past two months the rate at which these anomalies - and

the hardships and difficulties they have created - have come to

public attention has increased markedly. This is especially true with regard to the t e s t ’s impact on the rural community. still

there has been no response from the Government and in particular the Minister for Social Security, Brian Howe, MP.

Despite the increasing widespread dismay in the community and

both the Prime Minister's and the Minister for Social security's undertakings expressed in the course of the last several months, to review anomalies when raised, the fact of the matter is that

the Government failed to take any action before the legislation took effect on 21 March, 1985.

The long and sorry history of this legislation ind-icate's that the Government has continuously refused or failed to act until pushed to the limit. Australians are once again faced with a similar

situation.

As I outlined in February the Opposition has two courses open to it in the face of the Government's intransigence: it can propose

legislation to correct the anomalies or it can seek to obtain the passage through both Houses of Parliament of legislation to repeal the assets test upon gaining control of Parliament.

In February I moved a similar measure to this one in the senate.

It was defeated in this chamber due to the combined vote ot the

ALP, Australian Democrats and Independent Senators. The Opposition has now decided upon a new dual approach at abolishing the assets test.

The decision by the Opposition Parties to move to repeal was not

taken lightly. The Liberal and National Parties are opposed to

the assets test in principle because it is designed to encourage people to become more dependent on governments by discouraging them from accumulating assets in order to provide as much as

possible tor themselves. Our commitment to repeal is so based.

For this reason we have rejected the notion of seeking amendments designed to correct anomalies in the assets test legislation

which we believe to be so fundamentally lacking in merit.

This Bill seeks to obtain the repeal ot the assets test legislation, yve want to remove the assets test legislation which is having

such a dramatic effect upon Australian aged, especially those in the rural community.

From the outset, the Opposition has consistently made the point that the Labor Government's assets test will not catch the really rich whom it claims are taking unfair advantage of the pension

system.

On the contrary, it is the person who through thrift, modest,

enterprise and, in some cases, involuntarily built-up moderate levels ot savings, who will be affected. Of late the Government

has once again trotted out its "millionaires" argument in favour of the test. it announced that 12 millionaires have been caught by the test. I simply pose one question: at what price to the

taxpayer and to other pensioners and beneficiaries has such'

satisfaction been gained?

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3/

Some examples of anomalies arising out of the operation of the

test may spell out more clearly the common types of cases caught

in the assets test net -

. the widow who receives a legacy from her former spo us e,

but finds that the married couple's exemption limits of

$100 000 has reduced to $70 000 as she is treated as a single

person thereafter, but whose income requirements have not fallen c om men su ra te ly;

. the person of advanced age who, having owned and lived in

the one house for many years, is required to move to a

nursing home or an aged person's cottage, who realises a

considerable sum of money in excess of the exemptions

limits from the sale of the house a n d , because of inexperi­

ence and old a g e , finds it most difficult to handle the

investment of the f un ds ;

. the small businessman who sells out his business tor

little more than $100 000;

. a person in a similar position who moves to a "granny-

flat" to live with the family and finds that it cannot be

treated as a principle place of residence for the purpose

of the assets test because it technically is owned by the

person providing the land upon which the aged person paid

for and erected it;

. a person who pays rent in an aged person's home compared

with one who makes an "up front" payment upon entry to the

home which is treated as though it were the value of the

principle place of residence;

. the farmer whose farm property is unable to generate

income sufficient to support him and his spouse in retirement and their son or daughter and their family who have been

working on the property for little r e mu n e r a t i o n . Their plan has usually been that they will take it over to continue the

operation but are unable to afford the payments to the parents because of the low rate of return on such properties. Due

to the deprivation provisions of the legislation the parents are unable to qualify for the pension and legally transfer

the farm to the children, which is the only practical action to be taken;

. the Government provided the infamous "pension loan sch em e" to allow pensioners in this situation, or with other illiquid a s s e t s , to "borrow" the pension - with interest of 13.5% during their lifetime - against a security charge being applied to

the farm. In the best of circumstances, and assuming a life

in retirement of 15 y e a r s , this could build up to a debt of

$ 4U0 QUO and become a considerable problem for the inheritor to refinance, probably causing the eventual sale of the

property and destruction of the intention, which was to mai n­ tain the family farm o p e r a t i o n . The fact is that this

scheme is a defacto system of death duties.

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4/

. but consider the diabolical bind in which a farmer finds

himself if he has transferred the legal ownership of the

property to the children. Not only is he caught by the

deprivation provisions of the assets te s t , but because he no longer is able to effect a charge on the property owned by

his children he is unable to qualify for the pension loan

scheme as well l

. his only resort is to seek a pension under the hardship

provisions. H ow e v e r , he finds that should he own assets in

excess of $5 000 - for instance, a modest savings a c co unt ,

then he will not be eligible under that provision either.

There is probably no cleverer three-way attack on farmers yet devised by the Government than this. -

The extent of the hardship ruse on farmers became clear during the hearings of Senate Estimates Committee B last m o n t h . Despite

continuing Government claims that the hardship provisions will protect farmers experiencing difficulties and hardship under the test, only 23 applications out of 1260 had been successful by

4 April, 1985.

Because of the extensive complex and far-reaching nature of

these most serious anomalies in the assets test legislation,

there can be only one course - to repeal the legislation.

I would like to pay further particular attention to the plight of the farmers and the rural community under the assets tes t .

Following the release of statistics to the Government's primary industry caucus committee - and their subsequent reporting in

the media - the claims by members of the Opposition and farming

and rural groups that the test is discriminatory have been sub­

stantiated.

Those statistics revealed the effect upon pensioners of the

introduction of the assets test throughout the State of victoria.

Horsham* 8.3 Dandenong 2 . 1

Hamilton* 6.8 Geelong * 1.9

Wangaratta* 6.1 Oakleiyh 1.9

Swan Hill* 5.8 Ringwood 1.9

Camberwell* 5.7 Greensborough 1.8

Wa rrn ambool* 5.5 Werribee 1 . 8

Sale* 4.9 Cheltenham 1.6

Shepparton* 4.6 Moonee Ponds l . 5

Morwell* 4.4 Boronia 1 . 4

Bendigo* 4.1 Preston 1 . . 2

Belmont* 4.0 Northcote 1 . 1

Cauf i e I d 4.0 Coburg 1 . 0

Prahan 4.0 Lalor 0 . 9

St KiIda 3.1 Springvale U . ti

W e n douree* 3.0 Footscray 0.8

Box Hill 2.8 Newport 0.8

M i ldura* 2.7 Richmond 0.7

He ide lberg 2.4 Glenroy 0.7

Peninsula 2.4 Fitzroy 0.6

Ballarat 2.3 Sunshine 0.4

Knox 2.2 St Albans 0.3

(* indicates rural a r e a )

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I draw attention to the fact that the greatest impact has been

upon the rural a r e a s . I am concerned that similar figures I have

requested for the whole of Australia will show a similar tre nd.

Figures provided last week to the Liberal Member for Flinders

(Mr Peter Reith MP) show a variation on impact in his electorate

with the greatest effect being upon people living in rural areas of Flinders.

The growing dissatisfaction withthis obvious bias has resulted in ALP members representing rural el ec torates starting to voice their alleged concern. A survey of Govern me nt M P 1 s by the Melbourne

Herald revealed 22 members wanting changes to the assets test to give a fair deal to pensioners in country areas.

These Government members involved included :-Barry Cunningham McMillan Vic.

Chairman, Caucus Committee on Primary Industry

Ted Lindsay Herbert Old.

Steve Martin Ma carthur N.S.W.

Keith Wright Capricornia Q l d .

Michael Lee Dobell N.S.W.

Eric Fitzyibbon Hunter N.S.W.

Peter Cleeland MeEwan Vic.

John Gayler

John Brumby

Leichardt Qld.

Bendigo Vic.

If those members,purporting to represent rural areas,really had the interests of their constituents at heart why didn't they speak

up or act last year before the test was enacted in order to avoid

the current hardships and difficulties? It is all too easy for

them to come out n o w , and the question must be p o s e d : what has

prompted their sudden conversion, their constituents or their own electoral prospects?

Despite growing unrest — allegedly including Government ranks - the Minister for social Security remains u n m o v e d . When confronted with the results of the H e r a l d 1 s survey and asked if it revealed

an anomaly in the test, Mr Howe is reported to have said: "I'm

not sure I would call it an a n o m a l y ."

When further pressed pressed as to his backbench colleagues'

views that the test needed 'fine-tuning', he is reported to have s t a t e d :

"The Prime Minister has given a commitment that the assets test will be m o n i t o r e d . In a sense we are still in the

early s t a g e s . There are still further stages of appeal

. . ./6

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which have yet to be u s e d , but we would certainly do

£ i ne tuning if, in the e n d , it was clear it was ne e de d ."

Such optimism does not sit well with the history ot the Government's - or the Minister's - actions when directly confronted with

anomalies.

Mr Howe has been quick to criticise both the media and members of

the opposition who have highlighted the plight of tanners and

others under the assets test. But what did he expect? IS he

finding the human face ot the assets test all so different from

the statistical model upon which it was based. It that is the

Case then the Minister has been naive; that naivety should not

prevent him from moving to assist those people -who have been

caught in the net of this test.

Australia's rural community is angry about the assets test - and rightly so. It has begun to give notice of its concern.

Last month at the small South Australian town of Penola, 600

farmers came together to plan a rally to protest the impact of

the assets test on them and their families.

Despite invitations to a t t e n d , the Ministers for Social Security, Veterans' Affairs and Primary Industry and the Chairman of

Labor's Primary Industry Caucus Committee were notable by their a b s e n c e .

The main motion passed by that meeting called upon the Hawke

Government to re-instate all pensions until the assets test was either made more equitable or scrapped altogether.

A further insight of the Government's approach and attitude

to the rural sector - and all the more interesting given his

later public statement-was an incident involving Mr. Cunningham.

According to the Border Watch newspaper, when Mr. Cunningham was approached to attend the Penola meeting in his capacity as Chairman of Labor's Primary Industry Caucus Committee, he launched into what ‘ can only be described as a tirade against Australia's

farming community.

The article reported Mr Cunnungham as saying that if tanners were experiencing difficulties it was their own fault because they did fhot have their affairs in o r d e r . further he suggested that

farmers had been 'diddling ' the tax system for years and now

expected the Government to pay rent to pensioners on farms which a son operates.

Mr. Cunningham subsequently took exception with the report in the other place and wrote to the Border Watch demanding - I use his

own wording - an apology. The Border Watch has not done this

and Mr. Kelly Carter has issued a statutory declaration

substantiating his conversation with Mr. C u n n i n g h a m . I

I shall lodge a copy of that Statutory declaration in the Records Office this afternoon.

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Th is is the type of attitude that permeates this G o v e r n m e n t . The rural community feels betrayed by this Government - and Government Members - who have such little regard for their interest and their contribution to this n a t i o n . This discriminatory exists attitude despite M r . H a w k e s 1 claim in 1984 that his would be a Government

for ail Australians.

If the Parliament once again neglects its responsibilities in

this re ga rd , it is condemning to considerable hardship people w h o , in their declining y e a r s , are unable to cope with either the rate of change or the details and technicalities of it. As the

Government continues to fail to a c t , it is the view of the Liberal and National Parties that the Parliament - through this Bill - must initiate action.

I commend this Bill to the S e n a t e .

ooooOOOoooo

PRESS RELEASE A U S 7 H A I . I A ,,*

THE SENATE

Senator Tony Messner Shadow Minister for Community Services

4^/<£T

MULTICULTURAL TELEVISION TO START IN ADELAIDE ON 30 JUNE 1985

South Australian Liberal frontbencher, Senator Tony Messner, welcomed

today1s announcement that multicultural television operated by the

Special Broadcasting Service would commence in Adelaide on 30 June 1985.

"The announcement in the Senate honours a commitment given by the

former Liberal Government in 1982."

"The operation of television services by the SBS in Sydney, Melbourne

and Canberra have proven very successful and have provided those

communities with .greater choice in television."

"I believe that Adelaide will similarly benefit by the introduction

of this service."

CANBERRA 7 MAY 1985

Contact: Barry O'Farrell (062) 72 6966