GOVERNMENT SENATORS' REPORT
1. The Government members consider it was inevitable that those people
who would be affected by the provisions of Schedule 1 would be providing
most of the evidence to the Committee. The Government members do not propose,
therefore, to undertake a precise point by point debate with the contents
of the Committee's report.
2. While there were areas of agreement among all members of the Committee,
the report almost exclusively reflects the views of the people affected
and the Government members consider there has been an unreasonable weight
given to those views. There also been undue emphasis on the criticisms
of Schedule 1.
3. Budgetary considerations were not given sufficient consideration in
the report, and the proposed limitation of $250,000 before the provisions
apply would all but completely eliminate the savings to the Budget of
the Schedule 1 proposals. The Government members believe it is important
to note the following points:
- the Government has introduced a measure that people should seek to
maximise their income from their own sources before calling on other
taxpayers for assistance; and
- given the tight budgetary situation, the Government's view is that
all sectors of the economy should make a contribution to reducing the
budget deficit.
4. In relation to the question of equity, the Association of Independent
Retirees in its submission (SI-6) made the following statement in relation
to the people over 55 who would be affected by Schedule 1:
Our Association agrees that the proposed changes mean that these members
will be assessed on the same basis as those over age pension age are
assessed now. These changes would mean that 'young' retirees no longer
had an advantage over 'older' retirees.
5. Mr Daryl Dixon (Evidence, S30) considered that there has been an inequity
between those with, and without, money in superannuation:
I do not know how you can distinguish between assets and superannuation
... I am really saying that I believe that somebody has to spare a thought
for the people who do not have their money in superannuation.
6. The Department of Social Security, in response to questions about
people affected by Schedule 1, asserted that they did not think those
people 'would be affected to the degree that they think they might be'
(Evidence, Ms Flanagan, S55).
7. Until March 1993 compulsorily preserved superannuation and rollover
assets were exempt from social security assets and income tests until
age pension age. From March 1993, all superannuation benefits have been
exempt. It was the Labor government which created this blanket exemption.
8. The Government members consider that, because superannuation savings
are generally not compulsorily preserved after age 55, it is reasonable
to remove all exemptions after that age for social security purposes.
9. The Government members have reservations about the value of referring
Budget related Bills to a Select Committee for inquiry and report. This
is because of the likely balance against the Government (as in the case
of this Committee) vis a vis a Legislation Committee, and the resulting
complication and delay in reporting.
Recommendations
The Government members recommend that:
(a) Schedule 1 be passed without amendment.
(b) The government investigate the incidence of penalties on draw-down
of superannuation entitlements by those affected by this measure; and
The Government members agree with the recommendation in the report
that the government investigate the incidence of so-called rorting of
superannuation provisions for social security income support purposes.
(signed)
Senator John Watson(Chair), Senator Alan Ferguson, Senator Julian McGauran
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