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Monday, 10 September 1984
Page: 744

Senator GRIMES (Minister for Social Security)(9.30) —in reply-I thank honourable senators who have spoken in this debate on the Social Security and Repatriation (Budget Measures and Assets Test) Bill which introduces the budgetary measures in social security, including the assets test, announced by the Government in the last Budget. I am rather disappointed and surprised at the nature of the debate. I remind honourable senators that, in fact, the legislation does increase benefits to help pensioners and social welfare beneficiaries, in particular those with children and those in private rental accommodation. I think all those measures are important but as Opposition senators, with the exception of Senator Messner, do not seem to be interested in those aspects of the Bill, I suppose it is pointless to dwell too much on them.

However, I will point out that there has been general acceptance of the measure in the community. It is realised that budgetary restrictions were placed on the Government by the parlous state of the economy, which we inherited. Most people consider that for the Government to have increased expenditure on new social security measures by almost $400m, $616m in a full year, added to the almost $1, 000m which is inbuilt into social security in this country at the same time as it decreased taxes, increased the number of people in employment and presided over practically the largest decrease in inflation in this country's history meant that this was a responsible and reasonable Budget.

Those honourable senators opposite who have spoken, particularly this evening, seem to have had two chief interests in this legislation. The first, of couse, is the assets test. The second interest I find most interesting because Senator Walters, Senator Sir John Carrick before her and Senator Lewis before him spoke particularly about the failure of the Government to increase family allowances or the dependent spouse rebate. In fact, Senator Lewis said that the failure to index family allowances was a disgrace. Apart from the fact that there is nothing about the dependent spouse rebate in this legislation, nor should there be as any change to that would appear in other legislation, I felt that before we pass on from that I should remind honourable senators of the Government's record in this respect.

The previous Government introduced family allowances. Despite what Senator Walters and others at various times have said, the Opposition at that time-I was shadow Minister-approved the introduction of family allowances. The former Government increased the family allowance for third and fourth children in 1981 and for the first and second children in 1982. In other words, from the time the Fraser Government came into office in 1975 to the 1982 Budget those were the only increases in family allowances granted. Yet Senator Walters has the cheek to condemn this Government for not increasing family allowances in its first 18 months of government.

Senator Walters —What about the dependent spouse rebate?

Senator GRIMES —I am talking about what is in this legislation. Senator Walters condemned this Government for not increasing family allowances when the Government she supported did not do so in six years in office. In all that time, Senator Walters did not bleat once. I remind Senator Walters and honourable senators opposite that a $1 a month increase in family allowances would cost $ 52m a year. Honourable senators opposite can calculate what the sorts of increases they imply are necessary would cost and what they would have done to the Budget deficit. We make no apology for the fact that we could not increase family allowances this year. We did not hear any apology from Senator Walters, Senator Sir John Carrick or Senator Lewis for the failure of the Fraser Government to increase those allowances in all the years they were in government .

We have some confusion on the other side of the House about what we should do about the dependent spouse rebate. Senator Walters said we should have increased it this year. In fact, I think her remark was that we should have indexed it. Senator Jack Evans the other night said we should have abolished the dependent spouse rebate and turned all those payments-

Senator Messner —He is not part of the Opposition.

Senator GRIMES —I said 'senators opposite'.

Senator Walters —But he is a member of the Labor Party. He is not a Liberal.

Senator GRIMES —Am I not allowed also to talk about what the Australian Democrats say? Does Senator Walters consider herself the only person in this place who is capable of talking on social security? The fact that Senator Walters spent most of her speech talking about indirect taxes and other taxes is typical of the fact that she had nothing to say on this legislation or nothing that was worth while saying. The only person opposite whom I can remember raising a question about the actual measures in the legislation was Senator Messner. He raised the matter of the increase in the under-18 unemployment benefit being limited to those who had been on the unemployment benefit for six months.

I believe that Senator Coates answered that adequately by pointing out that this Government, unlike the previous Government, is not satisfied with the situation in this country in which we have 36 different payments for children. We have a large number of educational allowances which in some cases are inadequate and in many cases misdirected. We have that multiplicity of payments which was demonstrated very adequately in the report that was put out by the Department of Education and Youth Affairs and the Social Welfare Policy Secretariat. We are not satisfied with the situation in which people leave school and at the age of 16 to all intents and purposes have only two choices: To go on unemployment benefits or to get a job. We are proceeding with a wide ranging review of the income support that we provide for youth in this country. We are going ahead with that review because we believe that our retention rate in upper secondary and tertiary education is deplorable because it is so much lower than that in comparable countries.

We have to develop a better system. We are to develop a better system. In the light of the development of that new system, it was a budgetary decision that we limit those increases to that group of people. I remind Senator Messner, who seems to be very concerned about this, that from 1975 to, I think, 1982 there was no increase at all in the under-18 unemployment benefit rate. But again Senator Messner had no worries or qualms about that in all the years he was in government; it becomes a horrendous crime when the present Government, the Labor Government, does not make the changes in this community that he suddenly finds are urgent and necessary.

I do not suppose there is any subject which has had as much public debate and consultation as the proposed assets test. I do not suppose there is any subject which has been so widely debated within the community and which has been so widely debated within the community and which at various stages has created-but not now, I suggest, except in the ranks of the Liberal Party-so many different views. Of course, people are interested and will continue to be so. People will sometimes be concerned and sometimes mystified because it is always very easy to misrepresent a change of this type.

The most extreme opposition to the change same from Senator Sir John Carrick when he spoke earlier tonight. He gave the typical cry of the conservatives in this community. He said that we should change nothing. He said, in fact, that we should make things immutable so that people could be absolutely certain where they are. That is the sort of proposition which is absolutely typical of someone like Senator Sir John Carrick. If we never made any changes, as advocated by the honourable senator, we might as well all stay at home. We might as well not recognise that this world changes and that the change--

Senator Messner —That is misrepresenting his position and you know it.

Senator GRIMES —I point out to Senator Messner that they were the words he used. He said that we should change nothing in this area and that we should make things immutable so that people can be absolutely certain where they are. We know where people will be and we know one of the reasons we have to introduce an assets test is that the previous Government actually changed something and removed the assets test in 1976, and as a result of that a whole industry has grown up around avoiding the income test. I must borrow the words that Senator Crowley quoted tonight because they are worth repeating and I think they are important. The first quote is this:

The Government is absolutely right in introducing an assets test . . .

the latest version of the assets test proposed by the Government offers a much more equitable formula than has previously been produced . . .

It would be folly . . . to reject the assets test outright, as it is the only avenue which leads to effective control over the spiralling costs of retirement policies.

That quote was by Alexander Downer, the director of the Australian Chamber of Commerce, on 9 June 1984. As Senator Crowley pointed out, Alexander Downer is now an endorsed Liberal Party candidate for a seat which opposition members and many members of the Labor Party believe he will win. He will be in the House of Representatives after the next election unless something strange happens. That is Alexander Downer's view. It shows that the Liberal Party is hopelessly divided. Let me add another quote:

I have always argued that the social security system should be based on need. Therefore I do support the assets test . . .

What we have now is an assets test that will cut pensions off for people who are affluent and wealthy. I think it's a good start.

That quote was from John Elliott, Managing Director of Elders IXL Ltd, and Treasurer of the Victorian branch of the Liberal Party. The quote was in the Australian Financial Review on 6 June 1984.

Senator Messner —Come on now, you are sinking low now.

Senator GRIMES —Senator Messner can disown all those people and say that they should not have said those things. He can say that Alexander Downer did not know that he would get pre-selection and he should not have said outrageous things like that. But the Liberal Party did not mind his saying it. The pre-selection committee in South Australia, Senator Messner's home State, did not mind his saying it because they pre-selected him out of a whole field of people. The man they wanted to represent them in Parliament says the Government is absolutely right in introducing an assets test. Of course the Government is absolutely right. I am glad that there are some people is the Liberal Party who are able to give their honest views in that way.

The most important thing to mention in the short time that I have tonight is that although we have had a long and public debate, although Senator Gietzelt and I and other Government members have talked to almost every pensioner organisation and veterans organisation in the country and although, as Senator Haines said, the debate has largely subsided, because of the introduction of the new assets test, there are still people on the opposite side who desperately try to misrepresent the issue, and in doing so have an unfortunate effect on this debate and on some pensioners in the community. Once again, Senator Sir John Carrick is, as he usually is, absolutely typical of that class of people. Tonight he talked about the new powers that the Department of Social Security had to do all sorts of terrible things to people, such as enter homes and so on. He backed off from using Mr Parry's argument that we would ask people to take off all their clothes off so we could search them. That was Mr Parry, who fought the valiant battle for so many years in this country against decimalisation of currency and the introduction of the metric system. That same gentleman is still at it. Having lost those two battles he has now entered another battle that he is going to lose. Senator Sir John Carrick did not use the terms that Senator Townley used about 'Social Security police' or 'storm troopers' or any of that nonsense. He stopped a little short of that florid language as, I suppose, a knight of the realm should. But he talked about the Department of Social Security using these new powers to enter houses and do all these terrible things . However, he cannot quote from the legislation where this power is given and he will not be able to quote it in the Committee stage either, because there is no such power in this legislation. The power that the Department of Social Security has is the power that it has always had and the same power that it had when Senator Sir John Carrick sat in the chair in front of me as Leader of the Government and so vigorously defended everything that the previous Government did in matters of social security.

We have had the disgraceful example of Mr Hodgman, the member for Denison in another place, saying that people will be assessed for the amount of gold in their teeth. That is a statement that he has repeated over the last few months. That is a disgraceful, despicable and lying comment on a very serious subject, but then we have Mr Hodgman's example of someone in this Parliament who will say or do anything to get a headline, and who said on his return from overseas: 'I will do anything, anything at all to defeat the Hawke Labor Government'. But Mr Hodgman and his ilk and those people who do it in a more subtle way in their electorate offices-who tell people who make inquiries that they should sell all their goods, people like Senator Walters who tell people to put money under their beds-are a disgrace in this place. But that is the sort of thing that we will have to put up with. The fact is that the legislation does not give anyone the authority to enter homes. There is nothing in the legislation that gives people the authority to do that, nor will there be.

Claims are made that there will be a vast bureaucracy of thousands and thousands of people who will have pensioners all filling out forms and who will harass the pensioners of this country. Senator Walters quotes freely from evidence that was given to her in the Estimates Committee by officers of the Department, but she did not quote the fact that the numbers will be 1,100 reducing to 300 to maintain the assets test. She talked about the establishment costs in the first year or two, but she did not go on to say how low the maintenance costs will be compared with the benefits that will be gained by taxpayers in general from the assets test. But then, when one is pretty desperate, one becomes selective in one's argument. As a politician, I cannot really complain too much about Senator Walters being selective.

The simple fact is, as Senator Gietzelt and I have said many times, the basis of the test is self-assessment. In November 1984, if this legislation goes through, and I assume it will now that the Australian Democrats have said they will not oppose it, some 70 per cent of pensioners will get a letter with a guide to self-assessment. They need return the form only if their self-assessed assets exceed the $70,000 and the $100,000 for single people and married couples who own their own homes, and the $120,000 and $150,000 for those who are not home owners. Fifteen per cent of pensioners will receive a guide plus a statement of assets and they need to return these details only if their self- assessed assets exceed the limits, and 15 per cent will receive a guide and a statement of assets which they must return. Those are the kinds of figures we are talking about. The reason we are relying on self-assessment is that we know that the vast majority of pensioners in this country are honest.

Senator Lewis believes that veterans will be discriminated against compared with Department of Social Security pensioners. In fact, all veterans will be sent a form. Most will receive a simple form asking only seven questions. A small number will receive a more detailed form. Both forms will be accompanied by a guide to how they should be completed. The difference in approach between the Department of Veterans' Affairs and the Department of Social Security is mainly due to the differences in the way those departments operate and the computer systems that each of those departments have. Because of the simple nature of the Department of Veterans' Affairs forms, veterans should not be put to any significant inconvenience. The Department of Veterans' Affairs has had questions about assets on its forms ever since the previous Government excluded the assets test. The fact is that since the previous Government in 1976 excluded the assets test from the means test which existed, there has been an increasing number of people who, because it has been legal, and because there have been a sufficient number of firms around in the community to develop artificial schemes whereby people could avoid the income test, have been able to avoid the income test and avoid the intent of the legislation.

That is not something about which only the present Government talks. Senator Chaney at various times has spoken about this problem. In May 1981 he said:

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.

He was quoted again in the Age in August 1983 as having said that in 1981. He has said that and many other things in the past about the necessity for a proper needs-based social security system in this country. What did the honourable senator say tonight when he went through the history of his thinking on the assets test? What did he say tonight in his long, historical speech about what had happened and how he had thought about this matter? He said: 'We did not do it because we thought it was too hard. We tried and it was too hard'.

Senator Walters —It was too inequitable.

Senator GRIMES —Let us talk about equity, now that Senator Walters has raised it . Very good examples were put forward tonight of the mixed views the Opposition side has on equity. Senator Sir John Carrick first got up and, in a gross mis- statement of the facts, to paraphrase him, said: 'The Government introduced an assets test. There was controversy about that assets test.' All that is true. There were difficulties about that assets test, so the Government got a panel under Professor Gruen to have a look at the whole proposition. The members of Professor Gruen's group gave their time voluntarily to look at this matter- people such as the President of the Returned Services League, the Secretary of the Pensioners' Association, the Civilian Widows' Association, Professor Gruen. They had a look at this matter, and Senator Sir John Carrick said that they came up with two or three proposals. The preferred proposal was to include the family home. Senator Sir John Carrick, with typical modesty, said that because of the Opposition's objections to this, because the Opposition realised it would be so inequitable, the Government caved in and did not include the family home. I remind honourable senators that no assets test which has been proposed by this Government has ever included the family home. The first version did not include the family home, nor should any assets test do so. There must be a recognition of the high home ownership rate in this country. There must be recognition of the rapidly changing and yet irregularly changing values of homes in the community. Senator Sir John Carrick said that to introduce equity into this assets test it was important that the family home was excluded, and he took the credit for it.

Blow me down, the next speaker, Senator Walters, said: 'How terribly inequitable this test is because you have excluded the family home. Some family homes are worth $500,000 and some are worth only $40,000, and this is a terribly inequitable thing to do.' That ignores the fact that someone who lives in a home worth $500,000 is not going to be able to pay rates, insurance, maintenance and other things on the pension. Under the present income test, a person in receipt of the full pension who owns a home worth that amount must be manipulating his affairs because he must have other income to survive. Ignoring that fact, Senator Sir John Carrick on one side of the aisle on the far back benches and Senator Walters on the other side showed their mixed up logic by plucking these arguments about equity out of the air. The real inequity in the pension system in this country is the inequity that exists between those people-Senator Haines raised this tonight-who are getting a weekly superannuation payment or a small weekly income and who are excluded from part of the pension and the fringe benefits and their neighbours who have vast asset holdings which they have been been able to manipulate into capital gains, various forms of trusts or whatever and receive the fringe benefits and the full pension, That is one of the real inequities.

The other inequity concerns those people in the community who have to rely on the basic pension because they have no other income and who may or may not own their own home. They are in this situation not because they have been profligate but because they have been low income earners, had long periods of unemployment, had some financial crisis during their lives or had long periods of illness. For some reason or other during their lifetime they have not been fortunate enough to accumulate the sorts of assets that Senator Walters seems so desperate here tonight to protect. They are the people who are not getting adequate payment. They are the people who are not getting adequate assistance. If we persist in this country with a pension system which can be manipulated so that those with large asset holdings can get a full pension and full fringe benefits, thus contravening the very principles under which superannuation and other schemes were encouraged in this country, one of the principles being to make the recipients less of a burden on the social security system of this country, if we persist with an arrangement under which so much money is leached out of the system we will eventually run into the sorts of difficulties that many people, including members of the Opposition, have commented upon.

I am pleased that the Australian Democrats have indicated that they are not going to support the Opposition in opposing this legislation. I am pleased that the vast majority of people in the community, including Mr Ottley, the President of the Combined Pensioners Association of New South Wales, and others have recognised that what the Government is trying to do is equitable. After prolonged and continuing consultation and discussion with various groups in the community, the Government is trying to do what is supposed to be the aim of parties on both sides of this Parliament, and that is to introduce a pension system which is based on needs, a pension system which is equitable, a pension system which cannot be exploited by some people who have been exploiting it in recent years. I thank honourable senators again and I urge the Senate to support the legislation.

Question resolved in the affirmative.

Bill read a second time.