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Tuesday, 6 September 1983
Page: 379

Dr BLEWETT (Minister for Health)(4.02) —This rather pathetic motion rests on two issues, that is, the assets test issue and the superannuation issue . Both represent tough decisions made by this Government in order to see that the welfare resources of this community are distributed according to those most in need. While the motion itself is pathetic, one of the more tragic sights is the man who actually moved this motion. In the past, the honourable member for Mackellar (Mr Carlton) was noted for a coherent, intellectual position. He was known, of course, as one of the driest of the dries. Though I did not agree with all of the arguments that flowed from that position, nevertheless one could have a respect for that man's intellectual position and the kinds of arguments that he often advanced in this House to do the very things that the Australian Labor Party is now doing to ensure that the resources for social welfare in this society go most to those in need. But there was no sign of that at all. In fact, there has been no more discreditable passage across the floor of this House than that of the honourable member for Mackellar when he produces the sorts of arguments that he produced today.

He talked about these acts of the Government terrifying old people. But who has done the most to try to produce terror amongst old people by these decisions? Witness the kinds of alarmist campaigns that this Opposition has waged on this issue? Let me say again what the honourable member for Mackellar said: 'They are going to have to stew in this for many months.' The reason why no immediate legislation is envisaged is that the Government wishes to continue a dialogue with all of the pensioner organisations to iron out the anomalies and problems in relation to this assets test. As the Minister for Social Security (Senator Grimes) has quite clearly indicated, in the months ahead, before legislation is presented to this House in November or December, his task will be to examine the various problems, some of which were raised by the honourable member for Mackellar.

The honourable member for Mackellar also made a series of comparisons about some of the problems that arise in relation to an assets test and some of the difficulties and unfairnesses that occur. But those difficulties and unfairnesses pale beside the inequities of the present system, whereby those who often have considerable capital resources are able, through systems of capital gains, to avoid the incomes test entirely. One could produce a whole series of much greater inequities which the honourable member was prepared to recognise in our present system a year ago, when in government. It is much easier to produce the kinds of inequities we now face and which this asset testing is an effort to remedy, than the comparisons which, of course, can be made by the honourable member for Mackellar. But if one wants to judge which are the greater inequities , I suggest that the members of the Opposition look at some of the inequities which occur under the present system as a result of the growing avoidance of the income test because there is no assets test.

Before I deal with the specific matter of the assets test, I point out that I believe that the old people in this community can have a considerable basis of confidence that these actions will result in much greater resources being distributed to those most in need amongst the aged in our community. That can be seen if one simply looks at the commitment of the past Labor Government to this matter and its achievements. We will honour and are proud of that tradition of past Labor governments which introduced and developed most of the major income security measures in this country, such as aged, invalid and single parent pensions. The values of those pensions increased most when the party now on this side of the House was in Government.

Mr Hodgman —Why are you robbing them now?

Dr BLEWETT —I will deal with the particular contemporary problem of the honourable member for Denison, but it is about time the Opposition judged that in the context of our past achievement. The aim of the Labor Party's social security policy is:

. . . the prevention and elimination of poverty and social disadvantage through a system of benefits . . . based primarily on need.

Despite the kind of hysteria that is being created in some sections of the community by some members of the Opposition we will not abandon that commitment, which is to a system of benefits based primarily on need. We are on record as stating that:

To redress present inequalities social security initiatives will be co- ordinated with other government policies to redistribute income, wealth and general community resources.

We have begun the process. We have had some five or six months. We have not wasted time in beginning to see that resources are distributed more according to need in this community, a process which I am convinced will, during the first term of the Hawke Government, bring considerable advantages to pensioners and beneficiaries at the lower end of the scale. Very many pensioners on modest incomes and superannuation will also benefit.

I would like to remind the House, before replying to some of the ill-judged comments on this matter of public importance, of the progress made towards improving the living standards of aged persons which the previous Labor Government made when in office some 10 years ago. Let us look at what happened. This will give some indication to old people in this community as to what will happen to us as we re-order priorities in terms of need. We took the pension from a value of under 20 per cent of average weekly earnings to 24 per cent of average weekly earnings. The Fraser Government allowed that standard pension to slide back to 22 per cent. If one uses average weekly earning as a yardstick one uses a basic inflation index. Pensions in those years rose at twice the rate of inflation under Labor. So pensioners did not suffer from the effects of the world economic problems of those years. We expanded the rate of building accommodation for the aged and home care services. We introduced a range of community programs.

No Labor Government attacks aged or retired people. We have not caused them hardship in the past. We have no intention of causing them distress in this Government's time. We are faced with a disastrous projected $9.6 billion deficit dropped on us by the equivocating former Treasurer who at one stage, of course, possessed a desire to make some of these decisions himself but lacked the willingness to go through with them. We had no alternative but to re-assess the planned timetable of promises made to pensioners over the years and repeated by the Prime Minister (Mr Hawke) during the last election campaign. I repeat that the promises made during the campaign remain fixed-not just because we have made them to pensioners but because our concern for social justice demands that we honour those undertakings. In the present time of constraint we looked first at those people who, on any scale of economic and social disadvantage, are the poorest-the unemployed, including the young unemployed, pensioners and beneficiaries with children. We targeted additional social security expenditure towards them. If honourable members look at the Budget, they will see that those were the priorities that emerged at that time.

In recent weeks both the Minister for Social Security and I have spoken to many pensioner groups. They do not disagree with the high priority we place on bringing benefits to those most in need, particularly at this point of time the unemployed and other beneficiaries with children. Our policies towards age pensioners have been signalled on two occasions in the past six months. In May we limited the over 70s pension to pensioners whose income was less than $303 a week for a single person or $505 a week for a pensioner couple. Again, in making this decision-I think the means test is quite generous-they were given over five months' notice of a change which will not affect them until November next. In discussing the issues with these groups, I found no confusion and very little argument about the appropriateness of the decision. Married age pensioners, who have a greater likelihood than most of owning their homes, cannot be said to be in hardship if they are on incomes of $25,000 a year.

The planned assets test, as honourable members will know, does not come into effect for more than a year-not until 12 months after the passage of the legislation. The changes affect only a quarter of age pensioners and some will improve their situation. For instance, those who have money invested in savings bonds or a utility loan will have only 10 per cent of that investment taken into account, while the return in real terms to the pensioner will be between 12 per cent and 15 per cent. Others who foolishly left very large sums idle in cheque accounts will profit by better financial counselling. They put their funds in such accounts in an effort to evade the incomes test. They may not draw the full pension, but a better use of their savings, lump sum superannuation or whatever, will more than compensate.

Let me refer again to the assets limits. The home, car and personal possessions of a pensioner are disregarded for the assets test. No one will go into pensioners' houses to value their belongings. The first $1,500 for a single pensioner and $2,500 for a pensioner couple will be disregarded. No one will touch what might be called cash on hand or contingency money which a pensioner holds. The next significant figures are the assets pensioners can have and still collect the full rate of pension. They are $17,100 for single pensioners and $28 ,500 for a pensioner couple. Those figures are over and above all of the factors already eliminated. They correspond with the $30 and $50 a week which are allowable income under the present income test. As with the income test, the pension then reduces by $1 for every $2 until the pension cuts out at the assets level of $106,436 for a single pensioner or $177,428 for married pensioners. I suggest that very few of those pensioners are suffering hardship. I also point out that these figures are based on November 1983 pensioner rates. They will be higher in November 1984, but of course we cannot anticipate by how much.

Of course pensioners are unsettled by this change. It is a matter of deep regret, as I have said already, that honourable members opposite have abused their positions by deliberately frightening our elderly people instead of explaining to them the reality of the assets test. My colleague the Minister for Social Security has, since the change, seen many groups of pensioners and listened to the anomalies and cases that they have brought forward. We have pledged in this House and in the other place that if there are forceful reasons why adjustments should be made to the assets test, they will be made.

The assets test we have proposed was administered in that form by successive Liberal and Country Party Ministers until the Fraser Government eliminated the assets component in 1977. I am told that the right honourable member for New England (Mr Sinclair), when he was Minister, refused to abolish the assets test because he knew that people would be ready to exploit the system, as has increasingly occurred since 1976. He was right. It has been a major factor in our reimposing the test. Investment leeches have sprouted to exploit pensioners' savings for their own ends. Wealthy people have been encouraged to work a pension system designed for the less fortunate. We aim to put a stop to this deliberate circumvention of the pension income test which honourable members opposite allowed. They encouraged the wealthy to run away with social security money while they kept the standard pension level down. It was consistent with their actions in allowing tax cheats to run away with revenue while pay-as-you- earn taxpayers paid.

Honourable members opposite, who profess righteous indignation about the changes this Government is making, should come clean about their past. How would they have cut social security expenditure? For cut it they would have. In particular, I say to the honourable member for Mackellar (Mr Carlton), that we would like very much to know what other cuts they would have made in the circumstances we now face. What ways of obtaining additional revenue would they have chosen? Would they have imposed a capital gains tax? Would they have brought back death duties? Would they have abolished the dependent spouse rebate ? These are the policies of significant pensioner organisations. I suggest that some honourable members opposite, who talk so much about pensioners, should simply read some of the representations made by organisations about the issues I have just raised, and give this House and this nation some indication of what response they would have made to the economic situation to which their policies have led us. If the Opposition would not do any of these things, how would it finance higher pensions?

We have made our policies clear. We are directing scarce resources to the unquestionably needy. In the next year and in the years after that we will have additional revenues as a result of those additional resources which will go towards increasing pensions and benefits, as we have promised. A pension of 25 per cent of average weekly earnings will, under us, become a reality.