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Wednesday, 5 September 1984
Page: 490

Senator MACKLIN(3.55) —Senator Grimes, in his contribution to the debate on this matter of public importance, said, amongst other things, that governments are not capable of doing all that one might like. That is certainly a reasonable proposition with which probably no one would disagree. However, while the position of the poor in Australia may not improve, the least we could expect under a Labor government is that their position would not deteriorate. The cold, hard fact is that under the Hawke-led Government the poor are further below the poverty line than they were two years ago. With the exception of the 18-year-old unemployed they will still be worse off when they receive the handouts provided by the current Budget. I am not the only one who puts forward such propositions. Indeed, they were put forward yesterday by the Brotherhood of St Laurence. The cold, hard fact is that Australia's poor are further below the poverty line than they were two years ago. Adopting Senator Grimes's position, one would have thought that the poor at least would have maintained their position. Anyone who had listened to the promises made when the Hawke Government came to power would have hoped that the position of the poor would have improved .

I turn to the figures relating to this matter. From 1 November, the average single pensioner income will be 10 1/2 per cent below the poverty line compared with 9 per cent below the poverty line in November 1982. The income of the average pensioner couple with two dependent children will have dropped from being 8 1/2 per cent below the poverty line in 1982 to being 9 1/2 per cent below it this year. The Brotherhood's figures are supported by the latest estimates, which were released on Monday, of the Henderson poverty line which show that the single unemployed person receives less than half the minimum income needed to maintain any reasonable lifestyle in Australia. Based on procedures originally used in the Henderson Commission of Inquiry into Poverty, the estimates suggest that Budget increases in social welfare benefits will do little for the people who are more disadvantaged. We are not saying that benefits have not been given or that the benefits that have been given are not useful. We are saying that people who are most disadvantaged will receive the least benefit.

Currently half a million people in Australia receive unemployment benefit. Over two million people receive pensions. So it is extremely important that we consider those people. Our discussion today does not concern the whole ramifications of the Budget. Indeed, that discussion will take place after this debate. I would have hoped that this debate could focus-as we do so little in this chamber-on those who have so little in our community. According to the Institute for Applied Economic and Social Research at Melbourne University, the average family unit-a married couple with two children-needs to bring in about $ 227 a week to meet basic necessities. Currently, if the head of the family is not working, the basic figure is $204-the poverty line. If we take the Government increases into account, if the head of the family is not working the family will receive $194-$10 a week below the poverty line-and the family will receive $33 a week below the Institute figure if the head of the family is working. That is a most extraordinary situation. Of course, it is not possible for all those people on unemployment benefit to obtain work. I certainly hope that no one in the Government will suggest that that is possible because at the moment the jobs are not there.

What I would like to do, therefore, is paint the best possible picture for the Government to see what the current situation is for a typical couple. Let us take the pensioners living in rented accommodation. They would be eligible for supplementary assistance. They will lose a total of 50 per cent of their income if they earn $15 or less as a result of any effort on their part to increase their supplementary assistance. Therefore, such people earning $15 will receive only $7.50 leaving them $26 below the poverty line. If those same people earn between $15 and $26 they will lose an extraordinary 89 per cent of their supplementary income. I repeat that they will lose 89 per cent of that income. In other words, for every dollar they earn over and above that $15, they will get to keep 11c. If members of this chamber or even if the Prime Minister (Mr Hawke) took such work, they would be taxed at the rate of 60c in the dollar. The pensioner and family in that situation will be roughly only $3 better off for all that work. Surely that is totally unacceptable to anybody in Australia. We are not talking here of additional outlays or of increased deficits. We are merely talking of a liberalisation of what people may earn so that they can assist themselves.

I take as an example a mother working three hours a day, five days a week in a sandwich bar-a typical example of someone seeking to augment her meagre income. This part time job of three hours a day in a sandwich bar pays $15 a day. That would be the case under the wages set. The net effect of the mother working will be that she will retain only 10c in the dollar or a total of $7.50 for the week. If this person is paying anything for transport, as probably she would be-I have estimated $2 a day; a dollar there and a dollar back-she would be $2.50 a week worse off for working. Surely it is extraordinary when we reach a situation in this country where people on or below the poverty line and seeking to augment their incomes will penalised in that fashion. A change to this situation would in no way increase the deficit or increase outlays; it would merely give some relief to such people through a liberalisation of the rules on how much they can earn to assist themselves and their families.

I turn now to tax. Of course, we have had a great deal of discussion since the Budget was brought down on the tax cuts for the majority of Australians. Senator Dame Margaret Guilfoyle, in her speech, talked about tax indexation. With the tax indexation which operated during some part of the Fraser Government, there were far better prospects for people below the poverty line than would have been the case with any movement in respect of tax cuts. It was a pity indeed that the previous Government decided to abolish what I think was a very good advance in this area.

I will examine some figures in relation to this. If, for example, tax indexation had remained, a person receiving $5,000 a year would have benefited to the tune of about $95 instead of the $20 to be received under the current tax cuts. Therefore, it seems to me that one move that could be made in this regard by the Government, if it does not feel able to go to full indexation, is to index tax payments at that lower level so that the people who are really being ground down in our society would be the ones who would receive the relief. People further up the income scale would not get any relief although the people further down would. It is an extraordinary fact that if we had full indexation a person on $5,000 a year would get roughly $95 but will get $20 under the Government's tax cuts. A person earning $16,000 a year will get a tax relief of some $400 under the Hawke Government tax cuts whereas under the tax indexation I am suggesting, that person would still have been getting roughly only $95.

I think that shows the progressive nature of the indexation that could work to the advantage of those people on lower income levels. That is our concern in this debate. We are concerned that those people who are in that bracket in Australia, and undoubtedly they exist, are worse off. This is certainly so based on figures which have not been challenged by Senator Grimes in this debate and which have been obtained from reputable sources. As I have mentioned, the figures obtained from the Brotherhood of St Laurence and the Melbourne Institute show that those people are worse off now than they were two years ago. I think that means that we have to look at what types of movements can be made without going down the line that Senator Grimes mentioned.

We have suggested that there need to be specific reforms to the pension and benefit systems to eliminate these poverty traps. This is where the various scales and benefits move together in terms of maximum amounts payable and cut off points. Poverty traps have been generated by the coincidence of those various scales. Such traps have not been eliminated in the Budget. One would have thought that a Labor government, in terms of its ideology and rhetoric, would have addressed itself to the elimination of those specific poverty traps. Obviously there need to be improved community services managed by local people. There need to be economic and social development bodies at local and regional levels. There are dramatic changes needed to many parts of our education system. I will be talking about some of these education areas in the Budget debate. I will be speaking on how such low income people have been disadvantaged by the specific education policies brought in by this Government.

I think the two elements which probably stand out more than most are the need for higher permissible incomes for pensioners and those on benefits-that surely is necessary above all others-and higher child and family allowances to those groups in need. There are ways of doing this. Senator Grimes said that an amount of $800m will be necessary. We spend $1 billion on the spouse rebate, which should be redirected to the family allowance; in other words, directed to those families who have children, with all the problems they have to deal with. Surely , in community terms, that would be better expenditure of the $1 billion. There are many more examples. I do not think it is a matter, as Senator Grimes has suggested, of looking at a higher deficit. I think that must be rejected. There are other ways and means. If the Government cannot come up with those means, it is surely bankrupt in terms of this group of people.