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Monday, 30 March 1987
Page: 1705

Mr LEE(5.07) —Sometimes when I am listening to a contribution by another member of the chamber I wonder how that honourable member can keep a straight face and not burst into laughter. For the previous speaker, the honourable member for Gilmore (Mr Sharp), to have accused Government members of hypocrisy is really drawing a very long bow. We all know that over the last weekend the Federal Council of the National Party of Australia, the honourable member's Party, held an interesting meeting. One of the resolutions which I understand was carried unanimously was for a flat rate tax of 25 per cent to be introduced.

Mr Slipper —A single rate tax.

Mr LEE —I am grateful to one of Sir Joh Bjelke-Petersen's greatest supporters, the honourable member for Fisher, for clearing that up. The National Party wants to bring in a flat rate tax on 25 per cent. I often wonder whether the honourable member for Gilmore supports such a flat rate of tax.

Mr Sharp —On a point of order, Mr Deputy Speaker: I fail to understand what on earth a flat rate of tax, a single rate of tax, or whatever one wants to call it, has to do with the legislation before the House.

Mr DEPUTY SPEAKER (Mr Mildren) —I ask the honourable member for Dobell--

Mr Conquest —It is a very important piece of legislation, too.

Mr DEPUTY SPEAKER —Order! The honourable member for Hinkler will cease talking when the Chair is speaking. The honourable member for Dobell will try to remain relevant.

Mr LEE —I am glad that the honourable member for Gilmore bit, because the point I was trying to make is that before we can give a veteran a dollar, we have to raise that money through taxation. The National Party claimed last weekend that its policy will be to have a flat rate of tax of 25 per cent. Such a policy would massively reduce a government's capacity to raise revenue. The only way a government could have a balanced Budget or a moderate deficit would be to cut back government expenditure. The only way that the Government can cut back expenditure is to cut back in areas which hurt people, areas such as social security and veterans' affairs. It is hypocritical for the National Party to say that it wants to cut taxes and at the same time increase benefits for veterans. That is just not on in the real world. The members of the National Party have to say either that governments have to take responsible decisions that sometimes are not popular in the community or that governments have no opportunity to reduce taxation. I am pleased to say that this Government has taken a very responsible attitude in seeking to restrain government expenditure in areas where that is possible and at the same time has been able to deliver two rounds of cuts in income tax which will address the community's concerns on taxation.

I add my support to that of many other Labor back benchers for the Veterans' Affairs Legislation Amendment Bill. One of the most important aspects of the Bill is that it seeks to release veterans who are caught in poverty traps. Referring to poverty traps, people often do not realise how veterans can be affected by the different levels of taxation and income tests which apply to veterans' pensions. I think it is interesting to take particular examples of how veterans can be affected by these poverty traps. I shall take a figure of $100 a week as being the amount of non-pension income a veteran is earning. It is possible that for every extra dollar that veteran earns he will lose 50c through a reduction in his Veterans' Affairs pension income test. Depending on his non-pension income, he can also lose other amounts of that dollar. He could lose up to an additional 12 1/2c due to the increase in his taxable income. If his non-pension income is low enough he could also lose his pension rebate under the Income Tax Assessment Act. In such circumstances a veteran could face an effective withdrawal from his income of 68c for each extra dollar that he earns. No one in this community is paying 68c in the dollar in tax but people caught in poverty traps may receive the benefit of only 32c of every extra dollar they earn.

This Government is seeking to address this problem in a number of ways. Firstly, we are raising the threshold of non-pension income which veterans can earn before their pension is reduced through the income test. If a single veteran earns more than $30 a week, his Veterans' Affairs pension is reduced by 50c for every dollar earned above $30 a week. After 1 July this year such a veteran will be able to earn $40 a week and still receive the full Veterans' Affairs pension. Similarly, the threshold for a married veteran couple has been increased from $50 to $70 a week.

The most important change which has been made is in the area of the income test which has been applied to rental allowance. In the past, veterans have lost $1 a week for every dollar a week of non-pension income. This means that very few veterans who have any non-pension income have received that very small concession, the rental allowance. This Government very properly has decided to abolish the separate incomes test for rental allowance and that will provide very real benefits to veterans who are renting. In addition, we are also increasing the income write-off for veteran pensioners with children. These measures will go a long way to reducing the incidence of poverty traps among veterans.

The second area which I wish to address today is veterans' fringe benefits entitlements. At the moment if a veteran's non-pension income exceeds the limits set by the Government he loses his fringe benefits entitlements. While that limit is increased by an indexed amount twice per year, veterans in receipt of superannuation can often be placed over the limit by a small amount which means that they then lose all of their fringe benefits. I have had examples of pensioners whose income has been less than 50c per week over the fringe benefit cut-out level. As a result of earning the very small amount which is 50c a week over the limit, such people lose concessions on council rebates, telephone bills, public transport travel, drivers licences, motor vehicle registration and electricity bills. Veterans who are a very small amount over the limit for fringe benefits face very substantial increases in their costs of living. I would hope that the Government would be looking at some means of introducing a fairer way of phasing out veterans' benefits entitlements. I think it is a problem that fringe benefits cut out very quickly. Some people have suggested that veterans who are classified as having an income a certain percentage over the fringe benefits limit should receive entitlement to a percentage of fringe benefit on a sliding scale.

Another idea which I think has a great deal of merit is that we could offer a veteran who is over the fringe benefit limit a fringe benefit entitlement a card at a price. The Government could say: `It is going to cost the Government so many dollars to provide you with the fringe benefits card. Because your income is a certain amount over the fringe benefits cut-out limit, we will allow you to purchase a fringe benefits card for a certain amount'. I think that measure is worthy of investigation. From listening to contributions made by those on the other side of the House, one could have got the impression that this Government has made massive cut-backs in the level of expenditure allocated to Veterans' Affairs.

Mr Hodgman —You have.

Mr LEE —I refer the honourable member for Denison to page 384 of the Budget Papers of last October. Table 6 of the Commonwealth Government's Budget outlays indicates that in the last full year when there was a coalition government-that is, in 1981-82-the Federal Government spent $1,323m on assistance to veterans and their dependants. If this Government had made cut-backs we would expect that in last year's Budget we would have spent less than $1,323m. In fact, we have more than doubled expenditure for veterans and their dependants.

Mr Price —How much was that?

Mr LEE —More than doubled because the Budget Papers contain the estimate that it was expected that in 1986-87 $2,778m would be allocated to veterans. That is more than a doubling in a very short time. So claims that this Government has cut back the level of spending on veterans are incorrect.

I am very pleased to see the shadow Minister for Veterans' Affairs, the honourable member for Farrer (Mr Tim Fischer), at the table because I wanted to make a few comments on his contribution in this debate. I was very interested that there were few promises in his speech. He did not promise that he would undo the Government's legislation which followed the May statement. He did not promise that he would increase the amount that would be paid to veterans for their travelling allowances. The honourable member's speech also did not contain a promise that if the Opposition parties were elected to government they would alter the Veterans' Entitlements Act to allow the old rules which applied to totally and permanently incapacitated eligibility to apply again. There was no promise in his speech that we would go back to the old rules. There was no promise to go back to the old standard of proof which was applied.

I think it is quite significant that the shadow Minister for Veterans' Affairs has not been able to go on the record and promise that he would undo the legislation which we brought in in May 1985. It should not be forgotten that when that legislation came to a vote in this Parliament-it did not come to a vote in this chamber but it was voted on in the Senate-Liberal and National Party senators voted with the Government to pass it. That should not be forgotten. The honourable member for Gilmore described that legislation as daylight robbery of veterans. If it was daylight robbery for us to have brought in that legislation with the support of Opposition senators in 1985, why have the shadow Minister and the Leader of the Opposition not promised that they are going to undo what we did in the May 1985 statement? I will tell the Opposition the reason why it is not prepared to make that promise. It knows as well as we do that some people were rorting the system. Because certain decisions had been handed down by the High Court of Australia people who, under the old interpretation of the rules, would never have received veterans' entitlements were suddenly getting them. The Opposition knows that there were rorts under the old rules and that is why, if it is elected to government, which I believe is only a very minor possibility, for the same reasons this Government introduced that legislation it will certainly not undo it. We simply have to read the statements issued by the shadow Minister and the Leader of the Opposition to know that that is the case.

We also have to wonder what the hidden agenda of the Opposition parties is. As I said before, they say they will massively cut government expenditure. At the moment the Opposition has a $16 billion credibility gap. Its promises to cut taxation exceed its promises to cut expenditure by $16 billion-$16,000m. We have to wonder where else the Opposition intends to make cuts. Where are the hidden areas it is not prepared to tell us about at the moment?

Mr Price —What are they going to do about the Department?

Mr LEE —As the honourable member says, what is the Opposition going to do about the Department? If I have time I will come back to that later. Perhaps we were given a hint about the Opposition's hidden agenda in the draft policy document which was prepared by the Liberal Party Secretariat and was apparently leaked to the media at the beginning of last week. In that draft policy document there is a proposal to freeze pensions, to abolish consumer price indexation of social security pensions. I believe that would also apply to veterans' pensions. That proposal makes up $1,300m of the draft policy secretariat's proposals to cut revenue. It provides the majority of the Opposition's cutbacks, yet the Opposition cannot even tell us where the other $14,000m is going to come from.

Mr Jenkins —They don't know.

Mr LEE —As the honourable member suggests, the Opposition does not know. One of the other proposals in the draft policy document was a plan to increase the age at which women would become entitled to the age pension from 60 to 65 years. I believe that would have certain consequences for veterans. At the moment veterans become entitled to the service pension at age 60. If the Opposition raised the qualification for the age pension for women from 60 to 65 years, would it not be a very small step for it then to come back to this chamber and say: `We have raised the eligibility for the age pension for women from 60 to 65? We should also raise the age eligibility for male and female veterans for the service pension from 60 to 65.'? So the proposal puts service pensioners who are between the ages of 60 and 65 in a quandary. Do they have to worry about the security of their service pensions? How do they know what the Opposition would do if ever it were elected to government?

The last point I wish to raise is the Opposition's attitude to the abolition of the Department of Veterans' Affairs. The honourable member for Gilmore sought to suggest that the only people who had considered the abolition of the Department of Veterans' Affairs were honourable members on this side of the House. The Prime Minister (Mr Hawke) and the Minister for Veterans' Affairs are on record as saying that the Department of Veterans' Affairs will not be abolished under the Australian Labor Party. The honourable member for Gilmore told us that his personal view-I hope that I am not misquoting him-is that the Department of Veterans' Affairs should remain. I am sure that would also be the view of the shadow Minister, because obviously he wishes to become a Minister one day-although perhaps he has a death wish like the honourable member for Deakin (Mr Beale) who wishes to abolish his own Department. The shadow Minister indicates that he does not wish to do so. That is good to see.

It is interesting that we have not had a clear cut statement from the Leader of the Opposition (Mr Howard) as to his attitude on this question. The Leader of the Opposition has not given us a cast iron guarantee that he will not abolish the Department of Veterans' Affairs. The official Opposition spokesman on Public Service matters, the honourable member for Bradfield (Mr Connolly), has granted various media interviews promoting the concept of a structure of 10 senior or super Cabinet Ministers and 15 junior Ministers. That concept poses very grave threats to the Department of Veterans' Affairs. I refer the honourable member for Gilmore to an article which appeared in the Bulletin on 17 February this year in which the honourable member for Bradfield proposed that various departments should be abolished. To lend weight to my belief that John Howard is considering abolishing the Department of Veterans' Affairs--

Mr DEPUTY SPEAKER (Mr Millar) —Order! The honourable member will address the honourable member to whom he refers by his position.

Mr LEE —To lend weight to my belief that the Leader of the Opposition is seeking to abolish the Department of Veterans' Affairs I quote from the transcript of an interview on the Carleton-Walsh Report. The Leader of the Opposition said:

. . . the reality is that if you really want to cut personal tax you've got to cut spending in a way it's never been cut before . . .

Max Walsh asked:

Can you tell me where you'd cut expenditure?

The Leader of the Opposition answered:

Well, I'll tell you where I'd cut. I'd abolish a lot of departments.

I want to know whether the Department of Veterans' Affairs is one of the departments which John Howard intends to abolish. He has put no statement on the record.

Mr DEPUTY SPEAKER —Order! The honourable member again transgresses. I ask him to be a little more conscientious in the requirement to call honourable members by their correct titles.

Mr LEE —I wish to know whether the Leader of the Opposition intends to abolish the Department of Veterans' Affairs. Why will he not put out a clear statement to the Press saying that under no circumstances will any future Liberal government abolish the Department?

Mr DEPUTY SPEAKER —Order! The honourable member's time has expired.