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Tuesday, 15 May 1973
Page: 2113

Mr McMAHON (Lowe) - The Opposition supports the Bill now before the House. We do so for an obvious reason which I think would be well known to you, Mr Deputy Speaker. It is that this Bill was in fact inherited from my own Government which set the foundations and established the background against which the Bill was able to be presented. Generally speaking, the background of this Bill is this: In, I believe, October 1971 the Treasury commenced an internal inquary into superannuation schemes in the Commonwealth. The investigatory committee consisted of officers of the Treasury, members of the Superannuation Board, the Government Actuary and, if my memory is correct, a representative of the Public Service Board was later added to the committee. The inquiry was an internal investigation by the Treasury. However, my colleague the then Treasurer, the Leader of the Opposition (Mr Snedden), early in 1972 made a statement relating to the matter and called on a'l people who. thought that they could make a contribution to the inquiry to give their advice and assistance to the committee.

The House will also remember that during the course of the 1972-73 Budget the then Government stated that it would establish a committee to consider ways and means of financing the abolition of the means test and to look into the general problems of superannuation.

Later, after the Budget had been delivered, 1 stated that we had appointed Professor Henderson to carry out a major survey into the causes and the incidence of poverty and the action that should be taken by the Government in order to overcome poverty, wherever it might be. At the time we were drafting the Budget we examined the book prepared by the Applied Institute of Economic Science. We ensured that, on every single item touched on by the Henderson Committee at that time, the bentfits that were granted in the Budget would exceed the poverty lines as established by that Committee.

I well remember at that time discussing the matter in Cabinet, particularly with the then Minister for Social Services, the honourable member for Mackellar (Mr Wentworth). We discussed the problems that we would face. We wanted to deal with another problem, namely, whether we should tie the base rate social service pension and the base rate repatriation pension to an index. We looked at such -matters as tying those pensions to average weekly earnings or to the gross national product - I suppose it would now be the gross domestic product - and we also looked into whether we could take into consideration contemporary salary rates for comparable types of employment and tie the pensions to those. We decided also that we would '"n1, ^ other matters which I will deal with later.

Later - 1 believe it was about 13th November 1972 - I personally appointed Professor Pollard to carry out an investigation into superannuation and pension schemes, particularly in relation to index ties and other matters of that kind. In the statement forwarded to the Prime Minister (Mr Whitlam) by Professor Pollard, the Professor gives full credit to my Government for initiating the inquiry. Professor Pollard considered various means of adjusting pensions. I have mentioned some of those that we considered. Most of them were also given a most detailed and careful investigation by Professor Pollard. The first one that I think he dealt with - it was only this morning that I was able to examine the report - and which was examined very carefully was the question of tying superannuation or social service benefits to the national salary level existing at the time that changes were made and having regard to level of salary of comparable employment existing in the Service at the time of the change. Professor Pollard rejected that proposal for reasons which, though I do not completely agree with them, are sufficient justification for abandoning that method.

He then went on to examine a method which was favoured by my colleague, the then Minister for Social Services. That was adjusting superannuation and pension benefits in line with changes in gross national production. I believe that this method Professor Pollard effectively ruled out because there were too many elements to be taken into consideration which could move in disparate or opposite ways and could therefor have a distorting effect. He also pointed out, rightly I believe, that there can be changes in gross national production by reason of seasonal factors, as for example a drought or changes in the price of wool or other primary commodities. So I believe he was quite right in removing this method from consideration.

Professor Pollard also examined the question of tying pensions and superannuation payments to average weekly earnings. For similar reasons to those which we had discussed ourselves - that is, that average weekly earnings include overtime payments and payments for piece work - it was considered that this method was not appropriate for the purpose of adjusting pension payments. He also, wisely, drew attention to the fact that Public Service salaries are usually increased at a rate slightly below those of the average weekly earnings and that consequently if this method of adjustment were adopted Public Service salaries over a period of years would get out of kilter with the payments made to pensioners.

It will be seen here that there was a consistent line of policy and activity by my Government. We wanted pensions to be increased and we had various reasons for wanting pensioners to be able to join in the increased wealth that a country like ours, is able to produce. What' was the change in philosophy that inspired my own Government? I think it is true to say that for very many years it was believed that it was the responsibility of the Government to reduce or to eliminate freedom from fear and freedom from want and that consequently the pensioner should be entitled to have confidence in the fact that he would in moments of anguish and trial be assured of a base pension that would cover, first of all, the basic necessities and later on the conventional necessities such as housing, food and clothing, health and welfare services and similar types of necessities.

I think it must be accepted that anyone who looks at the history of 23 years of achievement is entitled to say that in making a comparison with other countries Australia has done better than most and it has indeed a creditable record. But in recent years - and I can speak emphatically about the last 22 months when my own Government was in office - we evolved a new type of policy. We came to these conclusions. First of all, that there should be automatic adjustments to basic pension payments including repatriation pensions. We believed that in a country like ours which was growing increasingly in wealth and whose prospects were increasing daily, that the pensioner should not only be entitled to automatic adjustments based on changes in the cost of living but also should receive increases in his pension which would permit a continual improvement in his standard of living.

In my policy speech delivered on 14th November I stated that we would have automatic adjustments to the base rate of pension, that the adjustment would be carried out halfyearly and that at budget time we would ensure that in order to make certain that the pensioner did receive the benefits of greater growth, the budget itself would make the necessary appropriations to permit higher standards of living for these people.

It is obvious that Professor Pollard has noted carefully all that my own Government had done and all the recommendations that it had approved. I congratulate Professor Pollard in recommending that the adjustments should be automatic and that the Commonwealth's share of the adjusted pensions should be 1-4 per cent of the changes that occurred in the consumer price index. That was the index that my own Government would have used for social service payments. There is one proviso - and I should mention it - and that is that the percentage increase itself should not be greater than the percentage increase in average weekly earnings.

Other provisions made in this Bill which I and my Party believe are of great importance include adjustment of the pension in this way and making certain that in the very unlikely event that the consumer price index goes down the pension itself will not be reduced. The Bill provides a built in protection against inflation because the greater the inflationary pressures the greater the increase will be in the pension and the less the inflationary pressures the less will be the increase in the pension. This, 1 believe, is an adjustment which must be of benefit and it is one of which we on this side of the House certainly approve. Adjustments will be automatic. Under this legislation the adjustment will apply from the first pension pay day in July.

I said that pensions would not be reduced. May I also mention 2 other statements which have been made in the second reading speech of the Treasurer? The first is that the rights of the widow will be protected. In the case of orphans and children, this is now under review and it will be considered by Professor

Pollard as will the other matters which have been referred to him under the terms of reference of the inquiry. The only reservation - perhaps I should not even put it as a reservation - is that I do hope that when Professor Henderson, in considering his report relating to social services, repatriation payments and the means of abolishing poverty within this country looks at automatic adjustments he will take notice of the arguments that are set out in the Pollard report and make adjustments based on the consumer price index with, if necessary, some additional adjustment based upon the fact that the community is becoming increasingly wealthy. In other words, making improvements consistent with both our increased wealth and the changes in productivity - we should ensure that pensioners and superannuation recipients are able to share in the improved economic conditions and are able to feel that the Government wants to abolish freedom from need, freedom from fear and freedom from want. We should all make our contribution to ensure that those ideals of a social services scheme, or a superannuation or pension scheme are observed. Having said that,. 1 do express some regret that the Treasurer did not mention that most of these proposals were initiated by my Government. I congratulate the honourable gentleman on the proposals which he has put before the House.

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