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Wednesday, 25 November 1959

Mr CREAN (Melbourne Ports) .- I support my colleagues in opposing this measure. Our main reason for moving our amendment is that many contributors to the Superannuation Fund are discontented with what they consider the inadequate value of the present unit. At present, it is valued at 17s. 6d., and has been at that figure for some time. As was indicated by the Treasurer (Mr. Harold Holt), the bill does not alter the value of the unit. It allows some contributors, in certain circumstances, to take more units. The maximum number has now been raised from 36 to 54. It is also recognized, apparently, that the costs of two persons are not exactly double the costs of one person. In future, widows having no other support will have their entitlement raised from one-half of the pension entitlement of their husbands to fiveeighths of that amount. That principle could well have some application in other fields of the economy. Apparently, the Government realizes that two people living together have a number of joint costs and that, when one person dies, the costs of the other do not fall to half of the former amount. Recognition of this fact is shown in the provision of a pension of five-eighths of the total pension instead of one-half.

This is a good principle, and could be applied to other sections of the community.

We should occasionally consider the role played by superannuation in community life to-day, as compared with the role it played when superannuation schemes were first introduced. My colleague, the honorable member for Melbourne (Mr. Calwell), has pointed out that about 92,000 people are in the Commonwealth Superannuation Fund and some thousands contribute to the Provident Account. This means that about 100,000 people are interested in the Superannuation Fund. When this number of breadwinners is related to the work force of some 3,500,000 or 4,000,000 persons, it will be seen that a fairly significant part of the community is covered by the benefits that will flow ultimately from the fund. The tendency in the community in recent years has been for private superannuation funds to develop. I was interested to note in the latest survey made by the Commonwealth Bureau of Census and Statistics that some 202,000 people contribute, either themselves or through their employers, to private superannuation schemes which are taken wholly through life assurance companies, and that a further 185,000 people are covered by what are called separately constituted funds. I am sorry that I have not figures showing the number of people who contribute to State and semi-governmental superannuation funds. However, the 100,000 in the Commonwealth Superannuation Fund, the 202,000 in private schemes administered by life assurance companies and the 185,000 in what are called separately constituted funds total almost 500,000 working people. In many instances, the contributors are married, and this means that perhaps 400,000 families are entitled to benefits from superannuation schemes.

In the immediate future, we should consider the effect of superannuation schemes on the community in relation to age and invalid pensions and the means test. All of these factors have become so entangled that in the near future we should make some serious examination of the problem. Quite a few vested interests are involved, and sometimes there are implications that are very difficult to sever one from the other. Of every £7 that is ultimately paid out of the Commonwealth Superannuation Fund, £5 comes from the Government, and only £2 from the contributions of the beneficiary. The statistics relating to private funds conducted by life assurance com'panies and separately constituted funds show that the pattern tends to be that twothirds of the contribution comes from the employer and one-third from the employee. The contributions, both of employees and of employers, up to a given level are allowable deductions for taxation purposes; so we must realize that most of these funds, in an indirect way, are subsidized by the Government. All this has some implication when you come to examine the very vexed question of either modifying or eliminating the means test. I suggest that in the next year or two we should have a committee or commission comprised of actuarially qualified people to assess all these private schemes, State government schemes and local government schemes and to relate them to the potential work force in the community. Separately, such a committee or commission could also consider the question of modifying or eliminating the means test.

At least let us get some idea of the nature of the problem. There are all sorts of side issues. One is rather intrigued when one looks at the way in which the funds of the Commonwealth Superannuation Fund are held. Out of a total investment of some £57,000,000 in government securities of one kind or another, only £16,000,000 is held in Commonwealth securities, and £40,000,000 is held in local government securities. The reason for that is because of the arrangements that exist in the Australian Loan Council. Any fund that is not subject to tax - and the Commonwealth Superannuation Fund is an example - is better off taking one-half of 1 per cent, greater yield offered by local government securities. Other people in the community, because they are given a tax concession on Commonwealth securities, prefer to invest in that form of security, because, taking the tax concession into consideration, they are a better proposition even though the interest rate is one-half of 1 per cent, less than is offered by local government securities. You have a rather interesting case study here. By reason of this cross-flow of financial policy it pays the Commonwealth Superannuation Fund to invest in securities issued by local government or semi-government bodies in the States because it gets a higher return; and the trustees, being prudent men and being interested to get the greatest rate of return possible, have a duty so to do. But on the other hand, other sections of the community prefer to invest in Commonwealth securities because they get a rebate of 2s. in the £1 in income tax as a consequence. All I am trying to indicate is that we are getting a very tangled skein in the Australian economy, and it is time that some of these strands that intertwine were untangled to see where we are getting.

At one time superannuation was undertaken because people thought the age pension was inadequate to provide for them, but gradually the ratio of disparity between the basic amount of the pension and some of the benefits that flow from these private superannuation schemes is becoming less; and for certain people in the community I suggest '.hat the main thing that should concern them in the future should be to take superannuation only to an extent over and above the base part of the pension. The point is that the more one contributes to these superannuation funds the more in one sense one deprives oneself of eligibility for the age pension. Tensions of this kind are at work in the community all the time. It pays some people, because of their income, to go the whole hog in an insurance scheme. But when a government is paying £5 out of every £7 of the benefits that flow from a superannuation scheme, perhaps we should ask ourselves whether it is just to provide superannuation pensions over a certain level on that basis of subsidy. Perhaps the subsidy should be fifty-fifty. or at a lesser ratio. Here we are really subsidizing a very select section of the community, a section that is already better able to look after itself than some other sections. I doubt if that is an equitable policy for any government to pursue. At least it is one aspect that requires examination.

With those few words I again express regret that such an important measure is being debated at less than 24 hours' notice. Yesterday the Treasurer indicated that if honorable members had any ideas on this subject they could bring them to him for consideration. I do not think that is quite how our ideas flow. Generally we have so much business before us that we tend only to look at the matters immediately to hand and we do not have time to reconsider what we have not been able to deal with immediately. But perhaps the Treasurer may find some machinery for making an exception on this occasion.

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