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Monday, 10 September 1984
Page: 725

Senator HAINES(6.01) —We are currently debating the Social Security and Repatriation (Budget Measures and Assets Test) Bill 1984. In some of the speeches this afternoon, although not all, we have heard some very emotional stuff about people who rip off the system on the one hand and, on the other, of blind, little old ladies who are done out of their widow's mite. I think one or two things have to be said about those two allegations. First of all, there are always going to be some people who can work the system, as there are with any legislation. Generally they are the ones who are best off. That is grossly unfortunate because they are the people who can afford the lawyers, the accountants and so on who can work around the system. I do not think we will ever be able to find a piece of legislation that is not loophole-free. However, we have to make sure that we come up with legislation, in this matter or in taxing matters or any other area, which leaves as few loopholes as possible, has as few anomalies as possible and which can be worked, so to speak, by as few people as possible. That sort of scheme should therefore be relatively simple and as easy to understand and administer as possible.

I may well have misunderstood Senator Messner regarding the second point that was raised. If I did, I apologise in advance. But in an imperfect world we are always going to have people who are disadvantaged under one scheme but who are not under another. I suggest that the example he gave us of the lady who rang him up one Sunday morning in tears was not a terribly good one since he started by saying that she was blind-

Senator Messner —I am sorry, she was going blind. I made a slip of the tongue.

Senator HAINES —Senator Messner has corrected what he said earlier. I thought he said that the lady was blind. Nevertheless, this gives me an opportunity to point out that in fact blind pensions are not going to be affected under this legislation; nor will unemployment, sickness and special benefits, war and Defence widow's pensions and repatriation disability pensions, which are paid by the Department of Veterans' Affairs. Apart from the people who are already on age pensions, those on invalid, wives' and widow's pensions and so on-there is a list available from the Department of Social Security-will be affected. There is one group of people who were not only not helped by the previous system but who will not be helped by this one either; that is, those people on small superannuation payments, some of which may be indexed and some of which are barely indexed and who have never had the opportunity to take out the large lump sums that other people were entitled to. These people have always been left out on a limb. In many cases they did not receive any more than the basic pension under the system that existed up until now, yet they were never able to benefit from the fringe benefits that people who were on the same amount of money, but were getting it from the Department of Social Security, were able to benefit from. There seems to be a lost puddle of people somewhere in the middle that nobody is going to be able to help until we come up with a universal pension- that is, presumable until we get a national contributory portable superannuation scheme or we have a universal non-means tested pension. Of course everybody would like that. Nobody likes a means tested pension, but until we reach the stage where we can get that on the statute books we are going to have to look for the best scheme that is available.

Both Sir William McMahon and Mr Whitlam promised within the last 10 or 15 years to abolish the means test, and neither did. Neither major party in the last generation has found that it has been able to abolish means tests entirely, no matter what it has promised at the elections. Indeed, Parliament has debated this issue almost since Federation, with the 1939 legislation being the closest we ever got to achieving a result, and I think we lost that by a mere whisker.

What we must bear in mind during this debate is that the Bill before us does two things: It is not simply a Bill which introduces an assets test; it increases pensions and benefits and other related matters as well as imposes an assets test which replaces the current unsatisfactory income only scheme. Whatever procedural niceties the coalition Opposition comes up with, it seems to me it is really bargaining one part off against the other. There is no way I believe that anybody can reasonably argue that opposing the clauses in this legislation that pertain to an assets test, and running the very real risk that the Government will not go along with the first part of this and increase pensions and benefits, is a good move. This is particularly so when the legislation is not nearly as bad as some people are making out. It is not going to throw people out on the streets. It is not going to deprive those people who are in need of a pension. The Government's hardship provisions, if nothing else, make that perfectly clear. As I said, it is furthermore a distinct improvement on the existing system where only an income test prevails.

This system, which Senator Chaney has tried to come to grips with, has over the years increasingly thrown up a number of anomalies. An example is the classic case of double dipping. I have already referred to superannuitants who were not given the opportunity to take out lump sum superannuation. Imagine how chagrined they have been over the last few years to watch colleagues in other fields, who have been able to take their money out as a lump sum, stash it away somewhere in a non-interest bearing account, offload it on to their children in some way or another, dispose of the income on assets and then go on the pension and full fringe benefits. I know a number of people that that has irked considerably.

This legislation is also a vast improvement on the hotchpotch system that was proposed by the Government last year. There are none of the massive anomalies in this Bill that were in the previous versions that were thrown before the Australian public. For example, this Bill does not reward one lifestyle or preference for leisure over another; nor does it have included in it that extraordinary notional 10 per cent income arrangement that was the bane of a lot of elderly people who were, for example, holding shares, often in blue chip companies that were yielding, if they were lucky, three per cent.

Last year, and until the time the Prime Minister (Mr Hawke) made his rather extraordinary announcement at the National Press Club earlier this year, the deluge of letters that I received from people pointing out just how they were going to be disadvantaged vis-a-vis somebody else, has dropped back to a trickle since Professor Gruen's report of the Panel of Review of Proposed Income and Assets Tests and since the Government indicated just what elements of that report it was going to pick up and what elements it was not. There have certainly been very few complaints made to my office by way of phone calls or letters about the unfairness of the scheme that the Government has put before us today. I believe this is partly due to the fact that when Professor Gruen's committee's proposals were brought down, I made it quite clear that as far as the Australian Democrats were concerned there were three elements that had to be taken into consideration by the Government, only two of which the Government chose to look at in the short term.

One of those was the exemption of the principal place of residence. The other was the need for indexation of the thresholds since it seemed absurd to us to allow people in two, three or 10 years time still to be bound by 1984 values. The third was an extension of fringe benefits, a large number of which are still in the hands of the Federal Government, to people on any sort of pension. The Government picked up the first two of those and I understand from some rumour I heard-the Minister for Social Security (Senator Grimes), who is in the chamber, may correct me if I am wrong-that the Government is at least looking at what can be done about fringe benefits.

Senator Messner mentioned the fact, and I think with some good reason, that there is an increasing number of elderly people in the community. However, I do not believe that this should be used-in fairness to him I do not think he said it should, although some people are using it as such-as an argument to justify keeping pensions down or necessarily of imposing some sort of test. I would have thought that the reason any sort of means test was being imposed, given that economic and other conditions are not right for a non-means tested universal pension, was not that the number of elderly people in the community was becoming too large for us to handle but simply that, given the size of the cake, those in most need should receive it first. Need must be a top priority if we cannot go the full direction of either introducing a national portable contributory superannuation scheme or coming to terms with a universal pension. Certainly this is the policy of the Australian Democrats and is clearly set out in our policy papers. If there is a choice between a small pension which is not means tested but is universal or a larger one based on need that gets to those people who need it and not to those who do not need it but which requires some form of means testing, the latter is preferable to the former.

I certainly support Senator Messner's belief that we should all work at improving economic and industry conditions sufficiently over the next few years in order to be able to do away with a means test. His estimate, the source of which I have forgotten--

Senator Messner —Gruen.

Senator HAINES —His estimate from Professor Gruen was that it was likely to take 27 years. Until that happy day turns up, I suggest that we have to address ourselves to the question of what we do with people who retire between now and then. The answer has to be that we make sure that those who do not need a pension do not get one and that those who are in most need do get one. As Senator Chaney is fond of saying, the fact is that there are defects in the present system. Those defects have to be confronted and something has to be done about them.

I am not silly enough to suggest that this Bill is perfect but I believe, as I have already indicated, that it is an improvement on the previous system under which people were able to dispose of their income and the money they had in a way that would still allow them to receive a pension regardless of whether they really needed it. Of course, this Bill is certainly not better than introducing a national portable contributory superannuation scheme but, like half of the rest of the people in this country, I have given up hope of this Government or any other government ever directing its attention completely to that. However, the Bill does increase pensions and benefits. If the cost of that is the introduction of an assets test that ends double dipping and prevents the asset rich from receiving a pension they do not need as much as other people need it, so be it. The Opposition has to make up its mind about what it wants; I believe that it has. That is its position. It does not necessarily mean that it is the right decision or that we have to agree with it. It is simply not possible to have it both ways. For that reason, the Australian Democrats will not support the coalition in its opposition to this Bill.