Hawke faces ‘grey power’

Press, 12 June 1984, Page 37

Hawke faces ‘grey power’

NZPA staff correspondent Sydney Australia’s Labour Government has lit a match under the country’s two million-vote “grey power” bomb with its decision to resurrect the assets tests for pensioners. Now the Prime Minister, Mr Hawke, and the party’s planners will have to wait until next election to see whether it will blow up in their faces. After six months of planning, changing its mind then trying again, of confusion and worry for the nation’s more than two million pensioners, the Government has presented the test which had the over-60s quaking. Instead of affecting more than 340,000 people, it will now tax about 40,000. Instead of bringing in an estimated sAust32o million in its first year, it will cost the Government sAust3o million in its first year to establish. The money and the heartburn for everyone involved in the saga is the price, as Mr Hawke put it recently, of “getting it right."

While it has been an exercise in consensus and vote-saving, it has also been a lesson in the power of the party’s New South Wales faction, of political will, of timing and footwork. How valuable an exercise it has been will become apparent when the country goes to its predicted early poll late this year or early next. The assets test was last dumped by the conservative Fraser government in 1976, shortly after it came to power, and replaced by an incomes test for pensioners. Last year, after the new Labour Government was forced by an angry union movement to back down from its plan to tax lumpsum superannuation, it produced in November a plan for an assets test. At the root of the concept was the fact that with the growing number of pensioners in coming years and fewer income earners, the “grey-heads” would have to help pay their way. Compared with what the Government has finally implemented, the original con-

cept was positively Draconian. The plan exempted the pensioner’s home, car and personal effects, and allowed ?Austl7,loo worth of other assets for single pensioners and ?Aust2B,soo for couples. The outcry was immediate and strident, with the New South Wales party in the fore, demanding at the very least relief for those who had saved all their lives to have a bit of comfort in their retirement in the form of a holiday home, boat, or caravan. The Minister of Social Security, Mr Don Grimes, relented, and a sAust3o,ooo leisure package was introduced. The package was not to be indexed, and the uproar continued, stoked on by the conservative Opposition happy to have a cudgel with which to beat the nation’s most popular recent government. There were anomalies too. What about farmers who retired on their land, or pensioners who had invested their money to support

them in nursing homes and retirement villages? Mr Grimes and the Minister of Veterans Affairs, Mr Arthur Gietzelt, were standing firm when along came the New South Wales Premier, Mr Neville Wran. The party’s national president threw his substantial political clout behind the demands for a better deal, but Mr Grimes was working on some deals of his own, and caucus approved his package on condition that work began on a national superannuation scheme. However, in 1984 the pressure from the pensioners and from inside the party built, coupled with the fact that in New South Wales it was election year and Mr Wran had to be protected, while Mr Hawke was planning an early election of his own. The Opposition and the small independent group of Democrats threatened to hold up the legislation in the Senate long enough for the political backlash to come just in time for the election.

On February 22, Mr Hawke abruptly canned the original scheme and announced the Government was going back to square one. A “community-based” committee was set up under an economics academic, Professor Fred Gruen, to go over the whole thing again and provide an acceptable plan or an alternative. Commentators suggested that what Mr Hawke was hoping for was for the committee, which comprised interests ranging from returned servicemen and pension pressure groups to the unions, to call for the tests to be scrapped altogether. It was claimed that the Government did not want the asset test in the first place but had been pushed into it by the N.S.W. faction after the superannuation failure. Mr Hawke, however, stood on his party’s honour and drive for consensus, declaring, “I have got the honesty to stand up and say we could have handled this better.” Then last month, as the Gruen Committee neared the end of its work, the. leaks began of what it was proposing. The main thrust of it was that pensioners would be allowed assets worth sAustlso,ooo for singles and sAust2oo,ooo for couples . . . end of deal. There was no leisure package, no exemption for homes. People such as farmers, who would be forced to change their lifestyles if they were forced to sell up to meet the test, were given the option of living on borrowed money and paying it back out of their estates when they died. The outcry, again especially in New South Wales, was intense. At the root of the protests this time was that house values varied wildly throughout Australia, from sAust4B,ooo for an average home in Perth to more than sAustBo,ooo in Sydney. The pressure again went on the Governmment, and on June 1 Mr Hawke unveiled its “final” package, a modified soft option offered by the Gruen Committee. Under the new deal, effective next March, the family home, car, and personal effects will be exempt from the test. So too will be a farmer’s home and home paddock. The test-free indexed allowance will be ?Aust7o,ooo for single pensioners and SAustIOO.OOO for couples. Commentators see the whole saga of a test of the Government’s political will to take bitter medicine — at first the Government baulked, and when Professor Gruen and his fellows served it up again, it was put aside in favour of a sweeter version ... at least until after the election.