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Thursday, 29 August 2002
Page: 3985

Senator MARK BISHOP (12:47 PM) —The Veterans' Affairs Legislation Amendment (2002 Budget Measures) Bill 2002 before the Senate today has three central amendments. Two of them concern technical adjustments to the legislation affecting war widows— namely, bringing into line the provision of backdating so that widows are not disadvantaged when they transfer to the income support supplement from Centrelink benefits and, secondly, the regularisation of an oversight in the original drafting affecting the inclusion of a non-pensioner's partner's income in the means test. Both of these are straightforward and are supported by the opposition. The key issue in relation to the bill, however, is the proposal to index the income support supplement—otherwise known as the `frozen rate'—as well as the service pension paid to war widows in their own right as veterans. In addressing the issues, I would also like to explore and set out for the benefit of the Senate—and for the veteran community— some of the issues within the policy framework for war widows. I do this deliberately because it seems to me that policy in relation to widows is pretty ad hoc and is full of inconsistencies and inequity.

Let me say at the outset that I do not propose to retrace the full history of the war widows pension, but some perspective is necessary to explain why we have come to this proposal today and to correct the cheap political shot of the Minister for Veterans' Affairs at the time of the introduction of the bill—namely, that this bill will `end Labor's freeze on the war widows income support supplement' and `end Labor's unfair treatment of our special war widows'. This is pretty rich coming from this government, whose term with respect to the veterans portfolio has seen a total stagnation of policy and a process of stalling and avoidance in the face of growing discontent within the veteran community. It also clearly demonstrates the policy vacuum we are facing with the Howard government on veterans policy because there is not the slightest inkling evident that this proposal forms part of any context with or overall view on war widows.

By way of brief background, the war widows pension was first provided for in the War Pensions Act 1914. It seems that it may have been paid as compensation for war loss and not as income support or as income maintenance, which were available under the Old Age and Invalids Act 1908; hence the pension has never been subject to any means test. Nevertheless, dependence on the veteran has long been the test. This, of course, is a test of financial support, not one of emotional or personal loss. It is, in fact, the single biggest confounding issue which pervades policy on war widows pensions and it is one which this government has compounded rather than simplified, which I will address later.

As recorded in the Bills Digest on this matter, there has been much debate about the appropriate level of the war widows pension. It is interesting to note that until 1952 it was linked to the rate of pay of the rank of the deceased veteran. The standard rate was introduced in 1972, but there has been continuing controversy about the rationale for the payment of pensions to widows, the linkage with the social security systems of income support and other allowances, the existence of a few myths and legends, and the overall pragmatic view taken regardless of principle and policy that everything depends on the budget at the end of the day. The latter, it would seem, is the only common factor when considering all the idiosyncrasies of the war widows pension. It continues to this very day with the Howard government's own special anomalies—as it likes to call them.

The policy with respect to war widows entitlements is very complex. It is also confusing, contradictory and unfair—all of which is the product of years of ad hockery. Let me give the Senate some examples by turning to compensation, income support or recognition. Although many assert that the war widows pension is compensation for the loss of a loved one, this is not clear. I suggest that we may be splitting hairs somewhat. It certainly is compensation for personal loss, but it is also compensation for loss of income earning capacity of the deceased veteran— or, by another description, income support. Originally, it was both. But changes over the years seem to have been driven more by the economic factor rather than the non-economic factor.

Certainly, if we look at subsequent policy formulation, we see that it has been treated as income support—firstly, because it was cancelled on remarriage, which ended dependency and, secondly, because the current government changed the indexation to match the policy applying to the age pension—that is, indexation by CPI or 25 per cent of MTAWE, whichever is the lesser. This form of indexation is, as far as I am aware, restricted to income support pensions so that they keep pace with the standard of living, as opposed to CPI, which applies to allowances and compensation, which are indexed by CPI only to keep pace with the cost of living. Yet it remains tax free and is not means tested— millionaires are fully entitled to claim—both of which are taken as signs that the pension is a right as a form of recognition for personal loss.

The decision in 1986 to limit widows' access to the war widows pension as well as the full rate of social security benefits, although expressed as a budget saving initiative, clearly was motivated by the notion that the widows pension was indeed a substantial form of income support, and that access to other forms of income support benefits should be limited—hence the frozen rate, as it is termed, and now the ISS, as it has become. From that time forward, widows were unable to access a range of income support benefits available under the Social Security Act, including the Jobsearch allowance, Newstart, sickness allowance or other special benefits.

I turn to dependency and marriage. Notwithstanding the above comments, and consistent with the attitude that the widows pension is a right, the cancellation of the pension on remarriage was removed prospectively in 1984 and retrospectively last year. Yet you do not have to be legally married: if you establish that there was a marriage-like relationship, that will suffice. However, separation is not a disqualification for legal marriage but it is for nonlegal relationships. So not only do we have complete policy confusion and contradiction as to the purpose of the war widows pension, but also we have substantial inconsistency and unfairness.

We also have a conundrum to which there are quite a few widows who want an answer, because despite remarriage no longer being a disqualification, a widow is still not entitled to claim if she remarried prior to 1984 and never claimed, or if an application had been formally rejected on the grounds of remarriage prior to 1984. That is, the widow must have been in receipt of payment as a war widow to have it restored. If you had a claim rejected or never applied, there is nothing to restore.

Divorce results in immediate termination of eligibility. This, of course, produces the very common situation of a long suffering woman who divorces her veteran husband, perhaps after many difficult years of marriage, sometimes for her own safety, only to find that it is the veteran's new partner who is entitled to the full pension on his death. Yet if she had simply separated, her right would have been preserved. As I understand it, this can result in two widows pensions being paid—one to the original separated wife and the other to any new de facto partner.

The notion of dependency also applies to children and, as we know, there is attached to the widows pension what is called a `domestic allowance' of $25 which, as I understand it, had its origins as a payment for children. It is not indexed but it has survived whether or not there are children being cared for. Because of this it is regarded by many as an intrinsic part of the war widows pension but, due to its history, it is treated separately and is not indexed. In the interests of simplification it would be better integrated into the whole pension and indexed. Certainly, in the face of family payments also available from Centrelink, it would seem to be a total anachronism in policy terms but it has nevertheless survived.

It is a great pity that the policy construct for war widows is so difficult because Australia as a nation has always honoured and respected the pain and loss of a loved one in war, and we have always honoured the promise to care for those left behind, commensurate with the values of the time. Those values, of course, have not changed but community circumstances have. The circumstances of 1914-18, which set the war widows pension in place, are simply no longer relevant. We do have a modern scheme, the Military Compensation Scheme, which does reflect these circumstances but, because of dual eligibility in limited circumstances, the two schemes interact, and interact badly. There are a number of issues here to which I will return in due course.

Having made that comment in passing, and having set out some of the factual background, let me return to the primary purpose of the bill—the indexation of the ISS. Whatever the intent may have been in 1986 to terminate war widows' access to social security benefits, and to freeze the rate then being paid, it is clear that unrestricted access to two streams of benefits—one from the VEA and the other from the Social Security Act—was difficult to justify in policy terms or in budgetary terms, simply because it contained an element of dual payment.

There should be no doubt, however, that we on this side fully support the notion that war widows are entitled to a level of compensation and support, in the event of the loss of their partner in the defence of the nation, over and above their peers, most of whom are on the age pension. This has been longstanding community policy, regardless of the fact that the probability of death from war-caused injuries diminishes rapidly with time, to a level now where many widows who are unsuccessful in establishing war causation feel aggrieved. It is clear now, though, that with the passing of time the difference between those war widows without extensive other income and their age pension peers is now an appropriate one and that indexation in the manner proposed in the bill is also appropriate. It is for that reason that Labor supports the bill.

Although incomplete, for reasons I will mention in a moment, it is in part also good policy. It reflects the respect and care promised to veterans that their loved ones would be looked after but does not treat them purely as an element within the welfare field. It recognises war widows as a special category of Australians to whom we all owe a debt and with a fixed additional benefit over their age/widowed peers. The decision not to amend the Social Security Act in the same way, and to thereby transfer widows to the Department of Veterans' Affairs, is similarly supported. We agree that wherever possible veterans should be serviced in a holistic way by the one responsible agency. Our support for this bill, however, should not be taken as an indication that all is well in the matter of care for war widows. There are some outstanding issues which need attending to.

The first, which has long been an issue for Legacy and the War Widows Guild, is the inclusion of rent assistance within the frozen rate. There are approximately 8,800 war widows renting privately and 4,300 renting publicly, with an unknown number not in receipt of income support whose accommodation details are unknown. Those renting privately, unlike anyone else in the community in comparable financial circumstances, can get no rent assistance at all. If we accept, as we do, that the erosion of the value of the ISS has now declined to a level where the combined value of the ISS and the war widows pension appropriately reflects the status of widows, the continuing inclusion of rent assistance within it becomes a new anomaly—to use the government's own hackneyed descriptor. What is more, it affects and discriminates against the most needy.

Then there is the nonpayment of ISS to widows who live overseas. Why they should be selected for such special discrimination is unknown, but there would seem to be little justification for it, except as a money saving device. Next, I repeat the point that I have made to most of the annual congresses of ex-service organisations in the last two months: namely, the plight of veterans' widows who are under 57 years of age and have no children. It is amazing that the needs of these women have gone unattended for so long when, in the last six years, over $2½ billion has been added to the veterans budget.

Take the case of a widow of a TPI who, we can assume, has cared for her husband for the term of their marriage—in some cases with accompanying harmful behaviour— with a long dependence on veterans benefits and has therefore been unable to accumulate savings and own a house or many other material assets of value and who, on his death, would be entitled only to the war widows pension and unable to get even Newstart from Centrelink. Such a person's income would fall from a joint value in excess of $1,400 per fortnight to just $446 per fortnight, and she would lose her concession card as well. It is ironic that, if she were in good health, she would in fact be $20 per fortnight better off if she did not seek the widows pension and the gold card but accepted the service pension at the single rate, rent assistance and Newstart, even with its harsh means test.

There may be up to 1,600 widows in this category and, no doubt, a reasonable proportion will fit the example I have just cited. Yes, they may have the gold card, but it is of no value if they healthy and it certainly does not buy the groceries. I mention this example not only because a small number of widows are doing it tougher than all of the others but also because it shows just how complex the issues are, simply because no attempt has ever been made to make the war widows pension mesh properly with the social security system.

The key point, though, is that this bill before us today effectively reverses the approach taken in 1986, which we should agree ought to be applied to all of the other limitations imposed at that time. For example, why should a young, healthy widow, with or without children, be precluded from access to Newstart and all the supporting training programs that go with it? Why should she be denied access to these other benefits simply because she is a war widow who, we now accept as a result of this bill, is entitled to a fixed means test benefit over and above that paid to her peers? This bill would have been an ideal opportunity to have done so and, if my numbers are right, it would cost very little—possibly less than the mobile phone bill for the Department of Veterans' Affairs.

Earlier in this speech I raised the question of whether we, as a parliament, could continue to consider the maze of complexity surrounding the war widows pension against the needs of women in modern society, and I suggested that it might be timely to draw a line to `grandmother' the existing policy, especially given that there is a modern equivalent. As I understand the government's proposal for a new single military compensation scheme, due to the differences between the two schemes and the differing values of the VEA pension and the MCRS lump sum, particularly for the younger widows, a choice ought to be offered on which widows could decide, on receipt of financial advice, depending on their financial circumstances.

As we know, lump sums are very attractive to young widows, as they provide the capital for them to re-establish their lives. But by choosing the lump sum over a pension they may, over their life, lose out simply because the pension, as a tax free, indexed and non-means tested benefit, is worth more. This is not a fair choice and, given the grudging acceptance now being given by the government to structured settlements, the question must now surely be why the new military compensation scheme cannot also offer a benefit with perhaps a minimum pension to provide ongoing income support and prevent dissipation as well as a lump sum, with the mix to be negotiated on financial advice but at the same time using actuarial advice to ensure that the benefit taken is no less than that currently available.

I make this suggestion in clear recognition that the government is in the throes of drafting a new scheme but also in recognition that what I have said today clearly illustrates that the continuation of the current war widows pension under the VEA is simply not viable, particularly for the new generation of the ADF. It is full of injustice for those currently entitled and simply should not be extended. Moreover it is of the utmost importance, when considering the form of war widows benefit in the future, that the policy rationale be stated clearly and in terms consistent with the totality of veterans policy and with an eye to the social security safety net as well. The government must clearly delineate those portions which are compensatory for loss and those which are of an income support nature, based on the current superannuation scheme. As one homogeneous scheme, linkages with the VEA and all of the offsetting which now bedevils ex-service personnel and veterans must be avoided at all costs. The opposition supports the bill.