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Wednesday, 7 April 1971

Senator GREENWOOD (Victoria) (Minister for Health) - 1 am sure 1 speak on behalf not only of Government supporters but the whole Senate when I extend congratulations to Senator Kane on the occasion of his maiden speech in this place. He has come to the Senate with a reputation as a redoubtable fighter in the interests of his own Party. 1 am quite sure that now he has broken the ice we can expect to hear from him in this place in the way that people outside it have heard him from time to time.

The honourable senator devoted himself to a motion today which seeks to have the Senate adjourn until tomorrow for the purpose of discussing a matter of urgency. This is a procedure permitted under the Standing Orders, lt enables the discussion of a matter of urgency to proceed in such a way that all the matters concerned in the alleged statement of urgency may be canvassed. At the outset I query, in response to what has been said, whether there is any urgency about the matter raised in the sense that there is something novel, some new revelation or some event which has happened recently,- which , would justify describing the matters raised by Senator Kane as urgent. I have noted the statement of urgency. The first paragraph relates to:

The grave deterioration as a result of inflation in the economic position of senior citizens dependent on income from superannuation schemes or from the investment of savings accumulated by thrift and sacrifice during their working lives, and the need for urgent appropriate action to relieve their financial situation.

Firstly I regard that statement as a statement replete wilh the general adjectival phrases which, to have meaning given to them, requires some elaboration. In fairness to Senator Kane he did survey the field, with suggestions as to the manner in which there could be some review taken, firstly, of the way in which pensions are adjusted and, secondly, of the whole range of private superannuation schemes. But :he language in which the statement of urgency is couched in the typical language so frequently used when matters of inflation are discussed and without some elaboration are quite purposeless in their expression.

The second point 1 make is that the statement, as expressed, represents merely an occasion for more talking when we should really get down to the job of dealing with the problems. 1 can only comment that this urgency motion will delay further consideration by the Senate of legislation designed to increase the rate of pensions by 50c.

Senator Kennelly - That is not altogether fair, you know. Is there no provision for retrospectivity in the Bill relating to the pensions to be paid?

Senator GREENWOOD - I appreciate that if one wants to be rather technical and legal, as Senator Kennelly is by the way he phrased that remark, it is fair to say thai retrospectivity covers the point. All I say is that if this matter had not been raised we would now be discussing a measure designed to give pensioner* an increase of 50c. The third point 1 wish to make about the statement of urgency is that it refers to a situation which is well recognised by the Government and one in respect of which it has been taking positive action. It may be that there is a difference of opinion as to the type of action which the Government should take. Although I did not hear from Senator Kane any criticism of the action the Government is taking, I apprehend from what he said that he would suggest that there are line's of inquiry and reviews which could be taken in other directions. I am quite sure that the Government will bear those mat lets in mind in its review of the whole situation.

It is an accepted fact that in any inflationary situation the people on fixed incomes are the main sufferers. I refer to recipients of superannuation payments which, at the time they entered into the arrangement to provide for themselves on retirement, were thought to be adequate. When the event comes, they find that the value of money is so reduced that they do not have the comfort and security for which they planned. Similarly, pensioners find that with a generally eroding situation as far as the value of their pensions is concerned their money is buying less than it was buying a year, a month or a week ago. Classically these persons have been regarded as the main sufferers under inflation, and they are.

Of course, there are others - people who lack the powerful industrial strength of members of the mighty unions. They do not have the power which the larger unions have exercised to secure benefits for their members. They are in a not often discussed group. They are also sufferers in an inflationary situation, but they are not the only sufferers. They are the individual sufferers, but there are people in other areas which impinge on the national scene as largely and are the responsibility of the Government. After all, the people who build schools and hospitals and work in those institutions find in an inflationary situation that their wages and salaries are increased. This adds to the cost of establishing schools and hospitals. It means that the money allocated by the Government for education, health and the whole range of State services and public works will not go as far as it was intended to go at the time of allocation. That is one aspect of inflation which has an effect throughout the community because it merely increases and enhances the difficulties involved in the initial situation.

The inflationary position, as I have said, is well recognised by the Government. The only hope one can express is that its difficulties and problems would be recognised by many people outside the Parliament who, in their clamour for higher profits and wages, greater returns and more money to spend, would recognise that there is a cost to be paid every time that $1 or $10 is added to their remuneration. This is the area in which the Government has been seeking by example and dictum to impress upon the community that inflation is not a matter solely for the Government to deal with but a matter which affects everybody. In that way it ought to be everybody's responsibility to exercise caution and restraint in the national good.

This statement of urgency enables a general restatement of the Government's recognition of the inflationary situation which is constantly posed as a threat to government and the steps which the Government has been taking in order to meet it. The Government has as its primary economic objective a reduction of the rate of inflation. This is a current primary objective and it was initially stated with considerable emphasis and publicity by the previous Prime Minister in January. It has been a constant concern of the Government for the 20 to 21 years of rule in Australia by Liberal and Country Party governments. In that period, if there is one distinctive and abiding achievement to which every Australian can point and from which every Australian can draw benefit, it is the financial management of the economy which successive governments have given in the last 21 years. It is the way in which the community has been managed and there has been a rising standard of living and an avoidance of those booms and depressions which were the constant fear of the 1930s and early 1940s. It is a positive achievement of the Liberal and Country Party governments over the last 21 years that they have given to Australians security in their employment and a financial management of the economy which has prevented the excesses which it was the concern of the government in the 1940s to avoid.

Likewise, in the stresses which have been developing in late 1970 and early 1971 the Government has been concerned to reduce the rate of inflation as its primary objective. What has it done? Firstly it has endeavoured to reduce demand pressures because, in whatever way it is couched, the essential inflationary situation is where there is either excessive demand or an undersupply, and that has the effect of reducing the value of what is available on the market. The demand pressures have been reduced in areas where they have been judged to be excessive. So it is that in public authority spending the Commonwealth Government has been reducing its expenditure by $70m from what it would have been in the current financial year. Equally important, in February of this year the Commonwealth Government said to the States which sought to have extra money granted to them that that was not the time for such a step.

In the private investment field after the Government had surveyed the areas of increased spending there was a dampening down of excessive spending in the area of manufacturing. Accordingly, the concessional taxation allowance granted in respect of manufacturing plants was suspended. These were steps taken by the Government designed in themselves to have a beneficial result. Equally important was the impact of these measures on the public mind, because they did create a consciousness in various places of the developing inflationary threat in respect of which everybody should be prepared to play a part. I think we can all from our own experiences refer to an area in which there has been a cutting down of what could be described as unnecessary spending. It is that type of co-operation which must be engaged in if the inflationary problems in the community are to be met.

The other broad area where the Government has acted or is acting is in the taking of direct means to counter those factors influencing costs and prices. Only within the last month the Minister for Trade and Industry (Mr Anthony) indicated that there was to be a tariff review. Only within the last week the Prime Minister (Mr McMahon) has indicated that there will be amendments along the English lines to control resale price maintenance, li is believed that these steps will have an effect upon the factors influencing costs and prices in the community. Those are areas in which the Government is endeavouring to control the economy, to reduce the rate of inflation, to control in some way the demand pressures and to endeavour to take action in the areas where prices would otherwise be rising.

Quite apart from what I have outlined, the statement of urgency stresses the need for urgent and appropriate action to assist those people whose economic position has deteriorated because of inflation. I have stressed the position of individuals who classically have always been so affected. I do not think it is fair to say that there is a need for appropriate action if the implication in the statement is that the Government has taken no action at all. The Government has been prepared - I instance what I said earlier - to increase the rate of pension, and the Bill to achieve that end is currently before the Senate. The increased pension for those on the maximum rate enables the real value of the pension to be increased above what it was at any stage in the past 20 years.

Senator Murphy - This does not deal with the second aspect in the motion which relates to superannuation.

Senator GREENWOOD - No. I am dealing generally with the position which has been raised by Senator Kane. If one takes a technical viewpoint maybe one would find difficulty in bringing this in. but it is a technical viewpoint which did not commend itself to the mover of the motion and I respond merely to what he had to say. I have indicated that by increasing the pension the Government has acted to increase the real value of the pension. That is involved in the current increase of 50c. Bearing in mind Senator Murphy's interjection, the fact is that income for the purposes of the Social Services Act and eligibility for pensions does include superannuation payments, lt is not to be supposed that simply because a person receives a payment under a superannuation scheme he is to bc denied any pension. The point is that where a person invests his savings to provide an income, on his retirement, income received from the investments is disregarded completely for pension purposes. The capital value of the investments, however, is taken into account in the same way as are other forms of properly in determining his means as assessed. A person who is on a reducing income in terms of superannuation payments is entitled to claim eligibility under the Social Services Act and to receive a full or part pension according to the category in which he places himself.

I sense thai the real point which comes forward from what Senator Kane has said is the need for a review of the private superannuation schemes with the design in mind of determining whether those forms of. superannuation are satisfactory in the present circumstances to provide adequately for people on their retirement.

Senator Byrne - It could be something like this: If a person in a private superannuation scheme is getting no more than the pension he should be entitled to the ancillary benefits as if he were a pensioner. That is another available proposition.

Senator GREENWOOD - lt is a proposition. Without going into the details of what Senator Byrne has said, that was the purpose - this has always been my understanding and the Government's intention - behind the amendments to the Social Services Act commonly called the tapered means test which were introduced in the middle of 1969. They were designed to meet to an increasing degree that situation.

Undoubtedly one of the problems of any Liberal government - in fact, of any government which desires to maintain the virtues of thrift, saving and individual responsibility - is to weld those concepts and virtues into a scheme which gives social justice. There is no doubt in my mind that the person who throughout his life exercises caution, prudence and thrift should be in a better position than that of a person who throughout his life, like the prodigal son, has squandered what he may have earned and then places himself in a dependent position on the state. Undoubtedly the state has an obligation, but as far as is possible the obligation should be met by not denying to those who have been thrifty and saving the benefits of their own prudence and foresight in taking into account the problems of their retirement.

Senator Byrne - Those who rely on the pension are not necessarily those who squandered their entitlement.

Senator GREENWOOD - I hope that in what [ said I did not suggest that.

Senator Byrne - lt was open to that impression and 1 thought you might wish to correct it.

Senator GREENWOOD - I am indebted to the honourable senator for his assistance. As I understood him. Senator Kane made a plea for a review, not only of the present private superannuation schemes but also of the way in which pensions are adjusted. I desire to say nothing at this stage on the way in which pension rates should be adjusted because that is the subject of amendments which have been proposed to the motion for the second reading of the social services legislation which is now before the Senate, and I will have something to say about them at the appropriate time.

The final area to which Senator Kane directed himself, although very shortly, was the need for an adjustment in superannuation payments to former Commonwealth employees in accordance with the notional salary adjustment scheme. As I understand it, the last adjustment was made in 1967. I am informed also that this was a matter which was placed before the Government for consideration when it was preparing the last Budget, but having regard to the Government's then obligations and the need to maintain stability and growth and not to engage in excessive expenditure, it was not then found possible to make any adjustment. I am sure, however, that (he points which have been made will be borne in mind by the Government when it is considering its Budget in the ensuing year. The Government regarded its own recognition of the inflationary situation as something which required action. That action has been taken, and I have mentioned the broad outline of it. Insofar as the motion which has been moved by Senator Kane carries the implication that the Government is not alive to the situation, the Government will not support it.

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