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Tuesday, 29 May 1984
Page: 2026

Senator GRIMES (Minister for Social Security)(4.36) —I rise to take part in the debate on the matter of urgency moved by Senator Messner. I find it a strange and in many ways quite silly matter of urgency. I think that the matter of urgency put down for debate in this place, the performance we have just seen, and in particular the performance in another place this afternoon which arose from discussions about the assets test and during which three members of the Opposition deliberately had themselves thrown out of the place, demonstrate what the Opposition is in fact about. It is about partisan political debate. It is about the sort of rhetoric we have heard rather than rational debate on a very important subject. It is about getting away from proper debate on important social and economic problems in order to indulge in the sort of partisan behaviour that we have seen.

There are two parts to the urgency motion and I think we should deal with them separately. The motion in fact attacks the Government. It attacks it first for its alleged 'failure to develop a coherent social security policy'. Secondly, it attacks the Government for what it describes as 'the punitive ... proposal to include the pensioner's home in an assets test'. I will deal first with the second part of the motion which deals specifically with one section of an assets test. Senator Messner made it quite clear in his speech that he was on about the assets test in general. I will take the second part of the motion first and then deal with the first part. The first thing for me to say is what I said in answer to a question this afternoon. Neither the Government nor I has put forward an assets test proposal which includes the incorporation of the pensioner's home. The assets test proposal which we put forward some time ago quite specifically excluded the pensioner's home. The attempt in this motion to attack the Government for putting forward such a proposal therefore is wrong. The basic premise of that argument is wrong and we quite clearly reject it.

It is quite clear not only from the various leaks of the reports but also from Professor Gruen's statements on television and in the public arena that one of the recommendations of his report is in fact to include the pensioner's home in the assessment of assets. I remind Senator Messner that it was the universal opinion of the Assets Test Review Panel that in fact there should at present be an assets test. But Professor Gruen also pointed out that there are other options in that report. One of the other options excludes the family home. I make the point that these are the recommendations of an independent committee, not of the Government. They are under consideration by the Government and they will be considered by the Parliament. They will be considered by the public at the right time when the report and the Government's response to it are put down. But they do not have the status of Government or ministerial recommendations. I repeat that the premise in the motion put down by Senator Messner is quite wrong . That premise is false. It is put there quite clearly to confuse the issue and to give the Opposition a few remarks on which to attack the Government. Secondly , the matter of urgency refers to the proposal in the Gruen committee's recommendations as a punitive proposal. This is clearly a matter of judgment. It is quite clearly a matter for debate, but it was introduced here by someone who complained to me publicly, when he first said that it was a punitive proposal, that he had not seen the report and had not read the report. I would have thought that such a judgment would be best made after consideration of the report and all the arguments for and against such a proposal, not as a result of speculative newspaper articles which was the basis of Senator Messner's and Mr Peacock's first opposition to this proposal.

This proposal was made by an independent committee composed of people such as Professor Gruen, a distinguished economist; the National Secretary of the Australian Pensioners Federation; the President of the Association of Civilian Widows; the President of the Returned Services League; the President of the Australian Council of Social Service; the former Secretary-General of ACOSS; a leading banker; and a leading academic from the ethnic community. To label such a proposal as punitive, without first reading the arguments and without proper consideration, is a perfect example of political irresponsibility. I remind honourable senators that the first accusation that this was a punitive proposal and the first condemnation of the recommendations of the report was as a result of a small article in the Age newspaper. At the time that Senator Messner and Mr Peacock were blowing hot and cold and carrying on about opposition to these proposals, Senator Messner was complaining that he had not seen the report and had not read it. To suggest that such a group of people would bring down, unanimously, a proposal which could be described as punitive, without reading the arguments, is, I believe, cavalier to say the least. To suggest that they would not have considered the effects of such a proposal and put in safeguards is, I believe, to unnecessarily denigrate knowledgeable and experienced men and women who sat down and did a conscientious job. They are being denigrated in a way in which I do not believe they deserve to be denigrated.

Is introducing the subject in this way the action of people who seek a coherent social security policy? Let us look briefly at asset testing in general. Senator Messner brought the matter up. He said that the previous Government removed the assets test; that it never varied and never moved from the situation that this might be necessary. Some people in the previous Government actually raised this question in public statements. I quote what was said in May 1981:

I think we cannot escape the fact that there are some genuinely needy pensioners in this country who do not receive enough help, while some other people, by the advantageous arrangement of their assets, are able to draw on the system to a greater extent than their real degree of need would seem to justify.

That is a quotation from an article by Michelle Grattan. That is a direct quotation from the former Minister for Social Security, Senator Chaney, and it appeared in an article written by Michelle Grattan. Julie Flynn wrote an article in 1981 when there was speculation that the Government was seeking to introduce an assets test. I remind honourable senators that Professor Gruen said on PM the other night that two members of his committee had pointed out that the previous Government had approached them when they were on the Australian Council of Social Service about how to introduce an assets test. Julie Flynn asked several Government Ministers and back benchers what they thought. She said:

A number of ministers and back benchers confirmed last week that there is strong support in the Government--

that is, the then Government--

for reintroduction of an assets test.

She could quote directly from only one person. She quoted the words of the then Minister for Social Security. She wrote:

The Minister for Social Security, Senator Fred Chaney, admitted ''there is a belief in the party that an assets-based test is the only way the problem can be handled''.

. . . All the ministers and back benchers contacted last week agreed that, in retrospect, the Government decision to abolish the assets test five years ago was a serious blunder.

Where are they all now? Is that why so many distinguished members of the Opposition have not been heard on this subject? We do not hear them now. They have not been heard, as Senator Messner says, in almost a year. They have not been heard. We hear from only Senator Messner and Mr Peacock. Why are these people so silent? Why do they not hold to the convictions that they held when they were in government? What has happened to the realisation that they made a mistake in 1976? The taxpayers and the base rate pensioners-in fact all social security recipients-have been paying for it since. Let us not hear about a coherent social policy until we can hear about why we have had this great change of heart by people opposite.

When we assumed government we inherited a social security system which, except for a period of three years, had been administered and developed by conservative governments since 1949. What did we inherit? We inherited a system which discriminated against the single unemployed because of the previous Government's failure to index their payments since 1978. We inherited a system in which payments for pensioners' children had not kept up with inflation because of the previous Government's failure to increase them in line with inflation. We inherited a system in which the base rate of pension had fallen to just over 22 per cent of average weekly earnings. We inherited a system in which pensioner renters in private accommodation were inadequately assisted. We inherited a system riddled with inequities and anomalies too numerous to name in the short debate here this afternoon. Above all, we inherited a failing economy, a lack of confidence in the business community and a general economic mess. We inherited a system which was incoherent and the people who administered it are now complaining about a lack of coherence in that system. We heard Senator Messner say today that the thing to do is to give all pensioners fringe benefits; that is the way to do it; that will solve all our problems. Why did not Senator Messner's colleagues do that when they were in government? Why did not Senator Dame Margaret Guilfoyle do it? Why did not Senator Chaney do it? Why did not all those Ministers for Social Security do it if that is the simple way to solve the problem? Was Senator Messner, in ministerial meetings in those days, advocating this sort of practice? If so, he did not succeed. Why is it suddenly the answer to all our problems when over all those years those fringe benefit levels fell behind the inflation rate?

When we came into government we knew the system was inadequate. It still is. I have made no secret about that. We know what we have to do. We know that we have to get rid of the inequities. We know that we have to set our priorities to deal with the poorest first and we have to do this within the constraints of an economic situation which severely limits our capacity, as it would limit anybody 's capacity, to make the sorts of changes that are needed. We took a look at what had to be done and we initiated changes which would at least set us along the road to removing the inequities from that system. In the first few days of government-in fact, I think it was four days after we were sworn in-we increased the single unemployment benefit rate and we have made further increases since to close the gap between this and the standard rate pension, a gap that had been opened in 1978 and had been widening ever since. We increased the allowances for pensioners' children. We did not increase them as much as we, or certainly I, would have liked, but we increased them because we considered it a high priority area. Within the economic constraints that we had we did this. We indexed the fringe benefit levels to afford some protection against inflation. We introduced a universal health insurance scheme. We removed the taxation liability on the beneficiary's allowance which was discriminatory at the time and which we had long advocated should be changed. We introduced a spouse carers pension. We recognised the extra costs to pensioners and beneficiaries in outlying areas by introducing extra payments for those who lived in zone A.

Those changes do not suddenly make the social security system perfect. That does not change the whole thing and remove all the inequities; nor does it make up for all the inadequacies of previous years. But we took a coherent and sensible approach towards correcting the severe anomalies which existed in the system then-anomalies which existed because of the activities and the failures of the previous Government and, to use Senator Messner's terms, because of the incoherent approach to social security of the previous Government.

In the areas of children's services, disabilities and aged people's services, we have introduced reforms to funding and programs to ensure that funds are directed to those most in need and to introduce a planning approach to many of those programs rather than the submission approach which favoured the upper and middle income earners in the past. The changes we have introduced in the past 14 months have not created a utopia in the social security system, but we have made a start at rationalising and correcting the system. One of the things we believe should be done and one of the things that many members of the present Opposition clearly believed previously should have been done is the removal of the inequities which exist in the present pure income testing system of pensions. We needed to remove the practice which enabled people to evade the needs basis of our social security system, which is the basis of our system and has been since our system was introduced.

Since 1976 when the assets test was removed, as the then Labor Party Opposition predicted, there has been a burgeoning of the industry to enable people not only to avoid the income test but also to avoid tax and to get full fringe benefits and the full pension no matter what their real income was. That situation has been recognised not only by the Labor Party but also throughout the social security system. It has been recognised by the business community in this country. It is a system which has enabled those who have received lump sum payments and who are fortunate enough and willing to indulge in evasion schemes to get the full fringe benefits and the full pension whereas those who have had superannuation payments on a weekly basis have had their pensions reduced or have frequently lost their fringe benefits.

The second aim of the exercise is to ensure that there is a redistribution of funds available for payment of social security benefit to those who are in need and away from those who are clearly not in need. That is what the system was and is about and that is what we clearly stated it was about. It is also what Professor Gruen and anyone who looks at the system says it is about. Concurrently, we announced the introduction of changes to the lump sum superannuation scheme. Such changes have been recommended by the Hancock National Superannuation Committee of Inquiry, by the Asprey Taxation Review Committee, and, over the years, by almost every inquiry into the taxation system in this country. A system whereby people get a tax deduction for their superannuation premiums and tax concessions at the end for their lump sums and are then able to manipulate those lump sums to get a full pension and full benefits is patently not fair and is inconsistent with the introduction of a national superannuation scheme, as all the committees I mentioned have reported.

Of course, when we suggest such a change and try to introduce such reforms, people who have had an advantage from the existing system will not like such changes and will complain. Oppositions will misrepresent the situation and try to present the perception to the people that they will all be affected and that we will take pensions away from the needy and from vast numbers of pensioners. I suggest that people read the report of the Gruen Panel, which gives the lie to that sort of nonsense. What has happened is that we have had a coherent approach , and we will continue to have a coherent approach, to social security. We will look at those in most need. I refer to single parents, unemployed with children, pensioners with children and pensioners in private rental accommodation. We will look to those people and see about redressing the situation as quickly as we can . At the same time we will look at inequities on the other side of the system so that eventually we will have a social security program which will in fact provide benefit to those in need to the degree that they are in need and will not allow people to leach the system.

We will look at the Gruen Panel's report. We will read it and we will consider the proposals. We will accept, reject or modify those proposals on the basis of a sensible, sane and logical reading of the report and not on the basis of a few leaked reports in the newspapers. We will not do a Peacock-we will not suddenly throw up our arms and say that something cannot be right-because we will recognise that that report was made by a competent, conscientious and intelligent panel which looked at this difficult situation. I wish the Opposition would look at the problems we will have in the future. I wish the Opposition would look at the development of a sane and sensible social security system. Until it does that, we will never have a rational debate on this subject in this place.