Wilson Tuckey (O'Connor, Liberal Party) Share this | Hansard source

The Families, Community Services and Indigenous Affairs and Other Legislation (2006 Budget and Other Measures) Bill 2006 corrects a situation created by the Hawke government that relates to people residing somewhere other than in a city or other metropolitan area. It has been one of the most outrageous arrangements ever imposed on people, because it affects their right, when applying for a pension, to be able to declare a house as an asset that is not subject to the means test, simply because the area of land on which the house is legally established under town planning laws is larger than two hectares—or, one might say, larger than a typical subdivided urban block. It ignores the town planning requirements that do not allow people to subdivide that larger area of land. They just happen to reside in a situation where subdivisions are not approved, sometimes on quite large acreages and even on small acreages—rural-urban blocks are typically larger than two hectares today.

Another interesting aspect, from a social perspective, is the huge benefit that accrues, particularly to rural communities, when older people are encouraged to remain in the area. It is a statistical fact that older people put significantly higher demands on health services. Whilst some might argue that that is a good reason to send them to a city, clearly when they do create that demand there is a viable option for medical practitioners and other people who service the aged and others requiring health services to stay in that community. And of course they can also provide emergency or childcare services so that younger members of the community can continue to reside in that region.

So every argument should be put forward to give possibly additional encouragement for people to reside in the community where they may have worked for a period of time. The legislation relates to those that have done so for 20 years. I find that an excessive period when statistically the turnover of housing in metropolitan areas is more like seven years—although I think that is extending out a little bit since state governments have got so avaricious with their stamp duty charges, and people are looking to stay longer in their original house. But, if there is a seven-year or, let us say, 10-year rollover of eligible housing in metropolitan areas, one would have thought that that period of time would have been more appropriate for this legislation. Nevertheless, this is still a significant improvement.

There are other aspects of the circumstances confronting people in this situation that I would like to put on record. We have had an attitude of: ‘Well, tough. You have lived in a house on a farm of considerable acreage. Your children have taken over the management of that property and you are supposed to move out and get a house somewhere else to be eligible for a pension’—because the acreage might be in the thousands. The house is then vacant. Nobody lives in it. But where do you get the money to go and buy the house that makes you eligible for the pension? We are correcting that for people who have had an association with a property for 20 years. That is too long and it should be a shorter period.

There are other injustices that arise in these circumstances for people who may have moved to a rural subdivision of, let us say, 10 hectares or just above that. Along comes the Centrelink valuer to decide the asset value of the property. Of course, irrespective of the size of the property, people are entitled to have the value of the residence on that property excluded for the purposes of the asset test. The habit of Centrelink is to say, ‘You’re out in the bush. The house is weatherboard and asbestos; it is not worth very much at all. All the value resides in the unused acreage.’

If we have taken time off to watch some of the real estate shows that proliferated on television for a time, we have seen similar weatherboard and asbestos cottages—the television company has applied some expense to tart it up—selling for $600,000 and $700,000. What happens when Centrelink visits a property that is not eligible under these circumstances because the people have not resided there for 20 years? I think that 20 years is far too long for the test. Even in terms of farming properties, a lot of people, in upgrading their farm assets, have moved in less than 20 years but are still committed to a family farming enterprise.

What is the value of a house in a rural town measured against the value of the house and the land? My argument is that there should be an obligation on the valuer to apply metropolitan equivalence. After all, a house is a house is a house. If the roof does not leak, it gives you the same protection wherever it is. I have seen this with resumptions. Governments have come along and said, ‘That house is 50 years old; it is not worth much.’ But when they kicked the people out of the block, those people had to go and pay the market value for another residence; that is what the house is worth. In many cases, those who do not benefit from this improved legislation should be given protection when Centrelink visits to reassess their property because someone down the street has sold a lifestyle to somebody willing to pay a high value. The value of the residence should be a metropolitan equivalent and, as far as I am concerned, for a pretty highly rated suburb. In many cases that would not prevent people from receiving a pension because they would have no other income.

I wish to take this opportunity to turn to a grave issue that is confronting rural families as I speak. Unlike some other people in this place, I do not choose to raise the matter in the parliament first simply because there might be some political advantage in it. I have already addressed letters to the Minister for Families, Community Services and Indigenous Affairs, though I have yet to receive a reply as I only made the representations recently. It has been the tradition in Australia—and a wonderful one at that—that when older members of the farming family retire, perhaps unwisely, from active service within the enterprise, it is taken over by younger members of the family, such as children or grandchildren. Property can be disposed of over five years and then a person could be eligible for a pension, and I accept that, but this has to be an arms-length transaction and so it does not necessarily achieve much. If you sell your $1 million farm to the kids, they are supposed to owe you $1 million.

Mr Deputy Speaker, you know well that the average farm is not worth too much. The reality is that the property has a limited value and you buy it back in grain production every two years with the cost of just planting the crop. Nevertheless, when it does change hands to an independent party, it is probably worth $1 million. The retiring family member has not achieved very much from the sale anyway because, even if no cash transfers, a debt has to be created. That is an asset. In the present circumstances, where those people have departed from activity within the business, they are prevented by the asset test from receiving a pension.

In better times, the revenues of the farming property are sufficient to support these parents in a modest way. But the reality is that in a drought situation it is often extremely difficult for the incumbents on the property in the business to support even their own family. As the Prime Minister reiterated yesterday, the government is very sympathetic to farmers who find themselves in that situation under exceptional circumstances and it gives both income support and, in certain circumstances, interest subsidies to the people who are actually operating the farm.

What happens to mum and dad, or grandma and grandpa? They can no longer access funding from the business; it is seriously losing money. Many farmers who put a crop in this year—it probably cost them $120 a hectare—find themselves receiving no crop proceeds at all. Mr Deputy Speaker Scott, you may even be interested yourself to know that as I stand here today the wonderful AWB pooling system is offering those growers with a very minimum amount of production $50 a tonne less for the wheat if it goes to export—and in my state there is no other choice—than the international price as evidenced in the trades on the Chicago Board of Trade. They have no choice about it unless this parliament decides to alter the veto that prevents other people bidding for those crops. When you are down to making a loss anyway, you need every last dollar you can get for your wheat. That situation has arisen because the pooling operator has pre-sold wheat at prices substantially lower than now apply.

The real problem I wish to draw to the attention of the House is that there are people at the moment whose assets have no productive value and who are retired from the family business but cannot get a pension because of the asset test. Either we extend EC to those people and incorporate them within the system, provided they can establish a fair case, or we have to alter further the pension entitlement of people who find themselves in this situation. This legislation is addressing a situation where we assign people to virtual starvation because they happen to sit on a piece of land that is bigger than two hectares. I guess they could grow a few vegetables to survive, but they cannot get any money. They have no income; they are too old to earn it. We are correcting that to a degree. I believe that over time the parliament has to revisit this because it is a very important issue.

It is notable that while in recent times every issue relating to someone’s employment has been raised in this place by the usually misinformed opposition—primarily, I think, in defence of some very well-paid industrial bureaucrats—I have not heard a word from them on the circumstances of these people over the 10 years that this provision has existed. In fact it is more like 15 years, I think. I certainly remember hearing Bob Hawke mention curtilage and that the house and the curtilage would be the only amount exempt. As I said, I do not think it has ever been valued sufficiently highly to give people the same protection as they get in a metropolitan area.

These are important issues. I totally support the bill; it is a substantial improvement. But I do question whether one has to prove sufficient association with the land by 20 years of occupancy. I think that could have been significantly lower—probably 10 years. I believe the Centrelink valuers, in looking at people who do not qualify under the 20-year rule and those who have made a recent investment of this nature, should, where there is no profitable productivity available from the additional acres, give the residence on that land a deemed value equivalent to what it would bring if it sat in a metropolitan area—because a house is a house is a house. That would relieve a lot of people who still find themselves with these problems.

Because of a recent experience, I strongly recommend to some that they do not go into these non-recourse loans—loans where you borrow money that will be paid from your assets when you die. They have a deleterious effect on valuations because the bank gets very generous with the valuation. I had some people in the other day who were going to get wiped out because they had gone to borrow some money under one of these arrangements and had accepted what I thought was a highly inflated valuation on their property. Then because they had gone through that process Mr Centrelink rang them up and said: ‘I hear you have a new value on your property. I want to take that into account in your pension.’ They had a very unhappy experience with me because I had to be quite critical of the things they had done. They had gone to one of these investment seminars and had come away thinking that they could have all this money and never have to pay it back. In fact, they were going to lose their pension in the process. People have to be very careful about how they manage those things and the contingent outcomes that arise.

In closing, I totally support this legislation. It is only too late in its arrival. I am very sad that the opposition over the years has not been putting the heat on this matter that has been put on by the members of the backbench who have had people in their constituencies with these sorts of concerns. Nevertheless, it is a great improvement, and I trust that the minister will take some note of the remarks I have made regarding where further improvement can be made, the recognition and treatment of the rights of people who choose not to live in the city and the benefits of encouraging people to reside in rural areas. It does start to spread our population—decentralisation is still a word that not too many parliaments practise, but these things have been disincentives to decentralisation in the past.

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