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Thursday, 13 September 1973
Page: 1015


Mr BERINSON (Perth) - This Bill is important not only for what it provides directly but also for the further indication which it gives of the general social security principles on which this Government is operating. In his second reading speech, the Minister for Social Security (Mr Hayden) listed no fewer than 16 major provisions which are included in the Bill. Without meaning in any way to be argumentative but simply putting it as a fact as I see it, I think it is true to say that the last Government would have divided the provisions contained in this single Bill into at least six or seven separate Bills so as to squeeze out the last drop of public approval and political advantage to which social welfare measures lend themselves. That is not the style of the present Minister and it is not the style of the present Government. I believe that that is a fact significant in itself.

As well as the specific provisions contained in this legislation at least 4 general features of the Bill are worth noting. In the first place the Bill confirms the Government's intention to honour its election commitment to increase the standard rate pension twice a year by at least $1.50 a week on each occasion until a pension level equal to 25 per cent of the average weekly male earnings is achieved. Secondly, and again in fulfilment of an electoral commitment, it takes the first positive step towards the abolition of the means test. Thirdly, and this time not through any electoral obligation but simply because of the Government's view that this is a proper course of action, the equality of various social security benefits is maintained. Fourthly, it is recognised that a responsible welfare system cannot be based on some simple view that more of everything for everybody will solve all. Accordingly, some hard and inevitably unpopular decisions have been indicated as well. I refer, of course, to the abolition of the age allowance, the introduction of qualified liability to taxation of age pension payments and future limits to the extension of fringe benefits eligibility.

For a start we should consider the assured biannual increase in the pension rate. It is strange how such a progressive commitment - one in such marked contrast to the process it replaced - can so quickly come to be taken for granted. More than that, the Opposition now has the nerve to argue that the provisions do not go far enough. To illustrate what I wish to say on that point I seek leave to incorporate in Hansard a table showing the rate, date of introduction and percentage increase in age and invalid pensions since 1948 together with the relevant pensions as a proportion of average weekly earnings.


Mr DEPUTY SPEAKER (Dr Jenkins

Order! Is leave granted? There being no objection, leave is granted. (The document read as follows) -

 

 


Mr BERINSON - I thank the House. As will be seen from the record of our Liberal Party-Country Party predecessors as illustrated in this table, far from providing pension increments twice a year there were 7 occasions on which for 2 years at a time they withheld any increase. It took from October 1961 to October 1964, a period in which average weekly earnings increased by over 16 per cent, for one of those governments to increase pensions by the same amount of $1.50 a week as we are now adding as a minimum every 6 months. Now the Opposition is saying that what we are doing is not enough. To see that as a short memory is putting it mildly. It is more in the nature, I suggest, of total amnesia.

The Opposition also has been putting an alternative argument forward in recent months. The Opposition is saying that we promised 6-monthly increases of $1.50 a week until the pension rate reached 25 per cent of average weekly earnings: but, given the present rate of inflation, that target would never be reached. That is what the Opposition is saying and it keeps on saying it as though it is making some sort of great discovery. 1 have in my hand, to illustrate that it is no dis covery at all, a paper presented to the very first meeting of the Health and Social Welfare Committee of the Labor Caucus held after the last election. It shows clearly enough that should average weekly earnings increase at any greater rate than 8 per cent a year, a 25 per cent average weekly earning pension will never be reached on the basis of $3 per annum increases. We know from the Budget Speech itself that this year we are in fact expecting a 13 per cent increase in average weekly earnings. That, undeniably, leaves our 25 per cent target in considerable short term difficulties. To that, however, 2 things should be added at once. Firstly, as "the Minister has repeatedly said, if $3 per annum increases will not do the job we have set them within a reasonable period, the increments will have to be increased; and this Government will do that.

What would the Opposition do? That remains the great unknown, for with all its criticism and indignation at the rate at which we might reach our own 25 per cent target it still has no target. It has no commitment at all. On the other hand, the record of the Opposition shows what its target would be likely to be if it were game to specify it. It will be seen from the table that has been incorporated that in 23 years of government the Liberal and Country parties, far from achieving a pension level of 25 per cent of the average weekly male earnings, never once reached a level so high as 22i per cent and in their last 6 years in office could never even manage a 20 per cent level. The reluctance of the Opposition to adopt our stand on pension levels stands in marked contrast to its adoption of our means test abolition policy. Let me be quite blunt about this. In my view a proper order of social welfare priorities should give greater emphasis to pension levels than to means test abolition. Whilst I naturally support my Party's program, I therefore cannot help feeling that, rather than committing ourselves to means test abolition within 3 years and to a 25 per cent average weekly male earnings level as soon as possible, the emphasis could perhaps have been better put the other way around.

The Opposition parties have had no such problems of priorities because whilst they have adopted our definite time-table for means test abolition they have produced no target at all, not even vaguely, for the pension level itself. Their approach, in merely criticising us, can therefore be seen in its true nature as an entirely negative one. As I understand this debate will conclude in a few minutes I refer briefly to the inevitably less popular measures which will come to be associated with the advances in this Bill, namely the qualified taxation liability of pensions and the abolition of age allowance. No government enjoys withdrawing any benefit or concession to any group, no matter how small. Naturally, a government will be all the more reluctant in this case where some tens of thousands of people will find themselves either liable to some taxation, or some greater taxation than applied under previous arrangements. The change, however, is inevitable if we are to retain a balance of equality as between groups of pensioners themselves on the one hand and between pensioners and non-pensioners at the lower income levels. More than that, it is an inevitable part of the desirable process of moving pensions out of the area of philanthropy and into the concept of earned entitlement.

To achieve a fair and reasonable changeover is not without its complications, especially where it has to be implemented partly in advance of the complete abolition of the means test and before the pension itself has reached the level that we would like. The Treasurer (Mr Crean) has assured us, however, that by means of the procedures to be adopted at least 80 per cent of pensioners - those wholly or largely dependent on their entitlement - will remain unaffected. They will not have to pay income tax nor will they be required to lodge returns. Of course, the converse of that proposition is that some pensioners will have to pay more. But with all due respect to their position - and I do appreciate their position - before we get as angry about that as have the honourable member for Mackellar (Mr Wentworth) and the honourable member for Murray (Mr Lloyd) I believe we should not ignore the position of younger families in similar financial circumstances.

Earlier this year, but for different purposes, I took out comparative figures. They are now slightly out of date but they are close enough to tell the story, and this is what they tell. A single pensioner on $47.20 a week, including pension at the time of the calculation, paid $54 tax, whereas a single worker earning S47.20 a week paid $248 tax or almost 5 times as much. Not only that but the pensioner in question received fringe benefits while the worker did not. In the case of married pensioners receiving $82 a week, including the wife's allowance, the combined taxation was $135 whereas a married worker with a dependent wife paid $581 per annum in taxation. Even the married worker with a wife and 2 dependent children paid $359 in tax, a sum almost 3 times as great as that paid by the married pensioners. And in this case as well the married pensioner couple on exactly equivalent income but paying much less taxation received fringe benefits while the married worker did not.

In the light of experience, and having said all that, I 'still believe that further modifications in this area might prove to be desirable. I have no doubt that both the Treasurer (Mr Crean) and the Minister for Social Security will have an open mind on the subject - though I hope that it will not be so open as to embrace the solution offered by the honourable member for Mackellar, namely that all pensions should be fully taxable but that we should retain the age allowance. On a later occasion I will perhaps have the time to indicate my reasons for disagreeing with that approach. In the meantime let me simply say that this Bill is to be welcomed as a further step in the direction of a decent and comprehensive welfare system. The Government is entitled to feel satisfied that it is not only meeting its electoral pledges in this area but that in many important respects it is already moving well in advance of them.







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