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Thursday, 23 August 1984
Page: 294

Senator MESSNER(8.00) —I move:

That the Senate condemns the Hawke Labor Government for its failure to address the needs of the aged and notes that the Government- (a) has failed to establish an Office of Aged Care as promised during the 1983 election;

(b) has failed to raise pensions to 25 per cent as promised during the 1983 election; and

(c) has consistently attacked the income security of the aged through a means test on the over-70's pension, an assets test on all pensioners, and the introduction of a savage new tax on lump sum superannuation.

In the document known as 'Labor Profile' of June 1984, published by the Labor Resources Centre in Carlton, an article headed 'Aged Pensioners' states:

Labor's record in government between 1972 and 1975 is evidence of our commitment to the dignity, independence and care of our retired and elderly citizens.

As disclosed in 'Labor Profile' of June 1984, the author of that document is the present Minister for Social Security, Senator Grimes. Something must have happened between 1975 and 1983, because I must remind the Senate that that document is dated June 1984. It comes as something of a surprise to read that the Government is apparently sticking to the claim that between 1972 and 1975 it demonstrated some mortgage on compassion for the people of Australia, especially the pensioners. It has put the pensioners of Australia through the mill of the over-70s pension test, the incomes test and the assets test, which it has not yet totally explained to the Australian people, and the lump sum superannuation tax, all of which took place during the last 12 months.

The Government's claim reads in an ambiguous way when one considers the statements made by the Prime Minister, the Hon. R. J. Hawke, at the recent meeting of the Economic Planning Advisory Council. The Prime Minsiter claimed in the presence of all at the meeting, when matters about the poor were brought up by Mr John Mackenzie, who is the current President of the Australian Council of Social Service, that the poor and their arguments were irrelevant and that the issues raised by Mr Mackenzie and the Australian Council of Social Service were not matters of economic value which needed consideration by that august body. That statement demonstrates this Government's concern and compassion for the aid and care that should be given to our elderly. The statement characterises every action with respect to the elderly that the Government has taken since coming to power in March 1983.

Never has there been such a catalogue of broken promises with regard to the elderly. It was promised that no assets test would be introduced for the over 70s. There was actually a promise that no income test would be introduced for the over 70s. Yet both measures have been introduced. Specific promises were made that there would be no tax on lump sums for superannuation purposes, yet a savage tax of 31 per cent has been introduced since the Labor Party came to power. Those measures, along with inaction in areas in which the Labor Party made positive promises, demonstrate that the Government has failed to attend to the problems of the aged.

One of the most significant areas of concern surrounds the question of the assets test. That test has caused unknown problems for the community. Let us catalogue a few of the steps along the way in that episode of disaster. First, the Government announced the assets test in the Budget Speech in August 1983. It claimed that it would raise some $300m for the benefit of the most needy in the community. The Government failed to explain what it intended to do with the assets test, except to say that it had that broad general principle in mind. In fact, what the Government deviously had in mind was to allocate in some way the $300m that the Government was intending to spend to the most needy in the community.

The point is that the Government failed to demonstrate how it would raise the $ 300m. The Government knows as well as we do that it had no idea about how much money would be raised as a result of applying the assets test at that time. As we have since found out, the assets test provisions were full of anomalies and were likely to create more difficulties. Apart from anything else, the provisions would obviously lead to exploitation by people inclined to do so and, consequently, probably cost a great deal more than the amount that would be raised to benefit the most needy.

The series of disasters that occurred last year was finally brought to a halt during February this year when the Prime Minister suddenly decided that we would have an investigation of the assets test. The Government therefore set up the Gruen Panel of Review of Proposed Income and Assets Test and brought in community representatives to examine the matters affecting the assets test. It is important to note that the Gruen Panel's terms of reference were not designed to enable the Panel to form an opinion on whether or not an assets test was good but to enable the Panel to decide on the form of the assets test.

Bearing in mind that the Panel's fundamental decision was made on the grounds that the test would assist the most needy in the community and bearing in mind the arguments that there would be an enormous increase in the number of people requiring assistance, which somehow had to be limited as time went by, the Gruen Panel came down with three specific statements decrying the arguments at the base of the Government's justification of the assets test. First, the Assets Test Review Panel said that up to the year 2015 or thereabouts, the so-called greying rate of the population of Australia would not increase faster than the rate of growth of the economy as a whole and consequently, it would be expected that the accommodation and assistance offered to those people could be met within our normal economic growth rate. Secondly, the Panel said that those in the pensioner age group at this time, who had lived their working lives during the period of the Great Depression and the Second World War would not have as adequate personal finances as those who live in the future. They would, therefore, be in greater need generally than those who will retire after the year 2015, and who, obviously, will have lived through far more prosperous times . That group of people would have had a greater number of opportunities to accumulate assets so as to be able to look after themselves in retirement. Thirdly, the Gruen Committee said: 'If there is an increase in the average age of the Australian population, it is logical to assume that if there is a growing number at the older end of that category there must be a lesser number at the younger end, and consequently there will be savings in expenditures in that area by governments'.

Taking those three points together, it is clear that the Gruen Committee denied the basis upon which the Government formed its decision to institute an assets test. Is it any wonder that the Government saw fit to reduce the proposed assets test to the squib that it now represents, where it claims that it may get $45m, I think, as a result of the introduction of the assets test, and that there will be substantial outgoings in the first place in order to establish that test, of about $30m in the first year?

Is that a proper basis for consideration? To be most charitable to the Government and the Minister, one must say that it is clear that from the outset with the assets test, with the income test and with the tax on lump sum superannuation, nowhere did the Government set down its objectives and make them clear to the people. (Quorum formed)

I am so glad that Senator Robert Ray saw fit to bring in Government senators to listen to these points about the assets test. I shall refer to one other matter while I have a captive audience-the tax on lump sum superannuation. We all know that that tax was somehow justified in terms of tax equity. That has become the new catch-cry of the present Government. We have seen it introduced in respect of wine in the last day or so, and it has been claimed that somehow the Opposition supports silvertails because it supports a wine industry in many of the States of Australia.

The point in respect of lump sum superannuation is that it has been argued by the Government that somehow people who get their superannuation in the form of a lump sum have a tax advantage over those who receive their superannuation in the form of a pension. That argument is based on a proposition that was included in the Budget statements in 1983: That there was expenditure of $2.48 billion on tax concessions for superannuation funds. In this year's Budget Papers I notice the inclusion of a similar figure-$2.6 billion. After all the exposure to argument in this place and before the Senate Standing Committee on Social Welfare inquiry into retirement income systems, I should have thought that the Government would have seen fit to recognise the force of the Opposition's argument that that figure is totally fallacious. The Treasury has acknowledged the shortcomings of that figure. It is well documented in the transcripts of evidence given to the retirement income inquiry that the figure is wrong. The figure has obviously been included in the documents by the Government to bolster its case that somehow lump sum superannuation is some kind of tax rip off in the community.

I point out just one factor, Mr Acting Deputy President-I am glad that you are occupying the chair at the moment, because you know so well the force of this argument and you will acknowledge it. That figure of $2.48 billion as quoted last year should be significantly reduced because it fails to take account of the tax generated to the Government as a result of investment income generated by the investment of those lump sums. That is estimated to be about $1 billion or more. Consequently, one must consider the figure included in Treasury documents as being much lower than that $2.48 billion, and probably about $1 billion.

The point I make is that although the Government argues that somehow occupational superannuation schemes are reducing Australia's capacity to meet its obligations to the old that is not so. The Government is merely fixing the books to show, according to its own bent ideology, that that is so. It is wrong, and it needs to be exposed as such. There seems to me to be absolutely no difference between a lump sum received on superannuation which results from the sweat of a man's brow as an employee and the situation of a self-employed person who, by the sweat of his brow, builds up an asset in the capital of his business , sells that goodwill-be it in a milk round or a newsagency-consequently receiving the benefit of that and, because there is no capital gains tax in this country, pays no tax on it.

Yet this Government wants to tax lump sum superannuation which results from employment. I do not accept that argument at all. It should not be put forward. Nevertheless, all these things represent a direct attack on the elderly and an attempt by the Government to justify its inadequacies and, perhaps, its shortcomings in its advice.

Let us look at the question of the Office of Aged Care. During the election campaign last year the present Government promised that it would institute an Office of Aged Care, presumably to take over the role of looking after and offering assistance to the aged in many different ways; presumably, to offer services in various co-ordinating ways, and so on. We have seen absolutely no action on this matter. The community has been waiting with bated breath to hear in this latest Budget which might happen in that area; but again, silence. We hear rumours that the Office of Aged Care may be set up in the Department of Health. That has caused enormous concern in the community, and I hope that the Minister for Social Security has already had that drawn to his attention. The question of some kind of merger between the Department of Social Security and the Department of Health in this area has been suggested, but again there has been no action, and not even a statement has emerged from this Minister or the Minister for Health (Dr Blewett), or even the Prime Minister, to clarify the situation. Rumour has it that it may turn up in the Department of the Prime Minister and Cabinet from now on; but again, we have had no clarification of the matter. If ever there was a document in which we might have expected that, it was the one handed down by the Treasurer (Mr Keating) last Tuesday night; but of course, we got nothing.

Never was there a clearer example of the difference between this Labor Government's philosophy and the Liberal-National Party philosophy in the area of aged care than in the current debate about retirement income. The Opposition stands to encourage people to provide for themselves by saving through their working lives. Our policy is directly opposite to that of the Government. We seek to encourage people through tax incentives and the removal of impediments in the social security system to build up their own assets during their working lives so that they can put aside money for their retirement. The present Government has exactly the opposite objective. It seeks to reduce the assets which people are able to accumulate and does so by taxation and the imposition of assets tests which are direct impediments to people to look after themselves and to build up assets during their working lives. By penalising thrift, the Labor Government is reducing people's capacity to look after themselves in their later years.

We see a total difference of philosophy between the Opposition and the Government in this area. We make that clear, as a matter of policy. This Government stands to encourage people to become dependent on government. We stand to encourage people to become independent of government. For that reason we have brought forward this motion to talk particularly about the measures entered into by the Government in the last few months and to raise the question of the promises which it has failed to honour since coming to office in 1983. The Government's excuse for the failure to raise pensions to 25 per cent of average weekly earnings no doubt will be made on the grounds that there are inadequate resources to achieve that at present and that the Government's objective is to achieve economic stability. If that be so, we must acknowledge that the Government has made an attempt to raise the pension by 35c on the single basic rate, towards that objective. It has acknowledged the Opposition's claim that pensioners should receive compensation for the cost of medi-fiddle- that is, the cost of the reduction in the CPI by the Medicare adjustment, and, consequently, has made some small adjustment of 35c in favour of the pensioners.

I imagine that most pensioners are very pleased with that, but one has to make a comparison. There has been a tax cut in the Budget of $7.60 per week for low income earners, that is, those earning up to about $12,000 a year, with a reducing impact for those over that figure. But for people in our circumstances who earn about $700 or $800 a week the benefit is $2.79 a week. That is the tax cut to which we are entitled. I acknowledge that the Government has scaled down that rate of tax benefit as we approach higher incomes, but I wonder how the pensioner will feel when he receives not even an increase of $2.79 a week but a $2.40 increase as a result of this Budget. In fact, people on $40,000 have a greater benefit from this Budget than have the pensioners.

Senator Grimes —No wonder you came into Parliament and gave away accountancy.

Senator MESSNER —Is that not a key point to acknowledge? If the Minister fails to acknowledge it, one knows that the people in the community acknowledge it. I conclude my argument on the point with which I started. Somehow along the way the Government has lost its compassion for the elderly, and yet still seeks to glorify its past achievements in this area by claiming in so-called propaganda documents such as 'Labor Profile', that its objectives are still the same. Those objectives are no longer clear, if they ever were. They have certainly been muddled as a result of the activities of the last 12 months. All we can say about this Government's activities is that not only has it created enormous confusion among the retired and the elderly but also it has led to misunderstanding as to the Government's intentions. If that be so, it is clear that the Government has opened the way to an alternative approach in this area. The country will get that alternative in the next few months.