It appeared from the questions put towards the adjournment on Wednesday last, that further elucidation of the method of calculating the means of claimants for old age pensions would be necessary. Owing to the many amending Bills to the Old Age Pensions Law, the position had become rather confusing, and, although I had not a lot of sympathy with Deputy Mulcahy at the time he put the question, when I looked into it afterwards, and realised the amount of research that was necessary in order to get a clear understanding of the various things that are taken into consideration, in estimating the means of a claimant, I had to admit that there was a good deal of justification for the question. Consequently, to-day, for the information of Deputy Mulcahy, and for the information of the House I propose to outline the method of calculating the means, and to indicate, briefly, the proposed changes in relation to existing legislation which the present Bill will bring about. The Act of 1911, Section 2, sub-section (1), paragraph (a), as amended by Section 4 (1) of the 1919 Act, and Section 5 of the 1924 Act, says:
In calculating the means of a person for old age pension purposes account shall be taken of the yearly value of any property belonging to that person (not being property personally used or enjoyed by him) which is invested, or is otherwise put to profitable use by him, or which, though capable of investing or profitable use, is not so invested or put to profitable use by him, the yearly value of that property shall be calculated as follows: (1) the first £25 of the yearly value of the property shall be excluded, and (2) the yearly value of so much of the capital value of the said property as exceeds the sum of £25 shall be taken to be one-tenth part of the capital value thereof.
Under Section 5 of the Bill before the House, it is proposed to substitute one twentieth for one tenth, as the proportion of the capital value in excess of £25, which is to be taken as the yearly value. It is generally assumed that such property consists of invested money, but I am not so very much concerned with the class of people who have £500 or £600 invested, and whose income would be calculated under this particular section. What I am concerned about is the case in which the capital value of property, other than money, is taken into consideration in estimating the means. Take the case of a farm which is capable of being operated, or being put to profitable use by a claimant, but which is not operated or put to profitable use by the owner, for the reason that he is physically unable to cultivate the farm himself, and that he cannot afford to pay a labourer to cultivate his farm for him. The result is that instead of cultivating the farm or having it cultivated, he lets it annually. In such circumstances it is open to the pension authorities to estimate the capital value of that farm rather than the actual income from it. Let us take a farm with a capital value of £325. The man who is unable to cultivate that farm, and lets it annually, might only make about £15 or £16, out of which he would have to pay land annuities and rates. For old age pension purposes such a farmer would be credited with having an income of one-tenth of the capital value, namely £30. That always appeared to me to be a considerable hardship, and it is because that particular class of people are affected by taking one-tenth of the capital value, instead of one-twentieth, that it is proposed to have this amendment inserted in the old age pensions code.
In the same way the capital value of house property is very often taken into consideration rather than the actual value in cash receipts from the letting. Let us take the case of a man who has put his whole life savings into building a house, or buying a house, who, in his old ago finds that it is not possible to live up to the same standard of respectability as he lived when younger, and who has to let the house to increase his income, perhaps taking lodgings in a room or in more modest surroundings. A house the capital value of which might be £500 might only bring in a rent of £15 or £16 to the claimant. Under the existing law if the capital value were £500 the amount that would be credited to the old age pensioner would be £50 yearly, while the actual income would be only £15 or £16. That appears to me to be unfair, and these are the class of cases we hope will be covered by the amending legislation.
I quite admit that theoretical cases can be made against this amendment. It is quite possible that we will be told about the terrible injustice to the taxpayers if people with £600 or £700 in the bank get a few shillings of an old age pension. Such theoretical cases may be met, but in actual fact we do not find people with £300, £400, £500 or £600 cash in bank or invested getting old age pensions, and I do not think we are likely to find them in future. The number of people with over £100 in cash, or invested, in receipt of old age pensions, at the present time, would not exceed fifty. I do not think that figure will be more than doubled as a result of this Bill. At any rate I think we should approach this matter, rather from the point of view of the cases of hardship that existing legislation brings about, than from the point of view of the possible abuses that the amending of the law may bring about. Personally I am prepared to risk giving a pension to an undeserving case in order to ensure that all deserving cases will secure the pension. Section 2 (1) (b) of the Act of 1911 says that in calculating the means of claimants there shall be taken into consideration:
The income which that person may reasonably be expected to receive during the succeeding year in cash, excluding any sums receivable on account of an old age pension under this Act, and excluding any sum arising from the investment or profitable use of property (not being property personally used or enjoyed by him), that income, in the absence of other means for ascertaining the income, being taken to be the income actually received during the preceding year.
We do not propose to make any alteration in the present Bill in that particular section. Account shall be taken of "the income which that person may reasonably be expected to receive during the succeeding year in cash." That will mean taking into account income from the estimated profit from a farm, a shop, or wages— in fact the entire cash income which a claimant may reasonably expect to receive during the coming year.
The Act of 1911, Section 2 (1) (c) as amended by the 1909 Act, Section 4 (1) (c) provides that account shall be taken of the yearly value of any advantage accruing to a person from the use or enjoyment of any property belonging to him which is personally used or enjoyed by him. It is not intended to make any alteration in that. That section will stand in the old age pension code when this Bill is passed. Such a section might come into operation for example where a claimant assigned his property, but reserved to himself a definite and specified portion of that property—a certain room, or a certain section of the house for his own use in his old age. The yearly value of such reserved portion could possibly be calculated and included in his estimate of means for old age pension purposes. Under the Act of 1911, Section 2 (1) (d) it is laid down that account shall be taken in estimating the means of a claimant to an old age pension of the yearly value of any benefit or privilege enjoyed by the person. It is proposed to repeal that paragraph completely. It is admitted quite frankly that the repeal of that section will have very far-reaching effects. The yearly value of charitable donations maintenance, food, clothing and shelter at present extended to the aged or the blind is estimated as means for old age pension purposes under this paragraph. In repealing this paragraph we intend to secure that nothing will be taken into account in estimating the means of a claimant to an old age pension unless what these people have in the form of cash income, or unless what they derive from investments, or what they have in their own legal right. I think this section will have a particularly far-reaching effect in so far as blind pensioners are concerned. I cannot conceive that many blind persons in this country will go with less than the full 10/- per week blind pension in future, as a result of the removal of this section, for the reason that the earning capacity of blind persons, or persons whose sight is so defective that they cannot follow their ordinary occupations, must be very limited indeed. When we secure that maintenance, food, clothing and shelter extended to them by friends or relatives or charitably disposed persons will no longer be taken into consideration in estimating their means, it is highly probable that most blind persons will be entitled to receive, and will actually receive, the full old age pension.
I was never satisfied that this particular section could be followed out and administered to its logical conclusion, if there is any logical conclusion to legal enactments. There does not appear to be any logical conclusion to this section. The means schedule under the recent amendment of the 1924 Act, provides that if a person's means from all sources exceeds the sum of £15 12s. 6d. he shall not be entitled to a pension of 10/- per week. The "estimated means" includes the estimated yearly value of any benefit or privilege enjoyed by the claimant. It appears to me that any claimant who did not enjoy benefits or privileges, such as food, clothing or shelter exceeding in value 6/- per week, could not exist. Consequently, if an accurate return were being made of the benefits and privileges, as well as the other sources of income which these people have, nobody could receive the full old age pension, because every claimant would be in receipt of income in excess of £15 12s. 6d. It was a physical impossibility to give a 10/- pension and logically administer that section of the Old Age Pensions Act. I do not believe that it was ever intended to include free maintenance or charitable donations but, whatever it was intended to do, what we have to consider is what it was actually doing. It was doing a number of things that we did not like to see being done. The safest thing to do is, I think, to remove the section.
In that connection, it was sometimes argued that there is a moral obligation on children who have been successful in life to maintain their parents in their old age. It appears to me that there is a moral obligation on the State to maintain people who have no means of maintaining themselves or who have reached an age or a physical condition when they are no longer capable of maintaining themselves. It is seriously argued by some people that if children succeed in life, have homes of a certain standard of comfort and take in the old people, that that standard of comfort should be estimated as "means" against the claimant. If that is maintained, the people who put forward the argument ought to be logical and should argue also that the pensioner classes who have been in a position to educate their children and place them in key positions, with a high earning capacity, should be maintained in their old age by their children just as well as the parents of the labourer or the farmer. It has never been argued that the children of people with salaries of £1,500 a year who can, at 65 years of age, retire on a pension of two-thirds their maximum earning capacity—£1,000 a year—it has never been argued that the children of these people should have any obligation to them or that they should be maintained by their relatives. If it is not argued in the case of the wealthy, it should not be argued in the case of the poor.
I think that practically covers the entire method of calculating the means of the claimant. Sub-section (2) of Section 2 of the Act of 1911 provides:
In calculating the means of a person, being one of a married couple living together in the same house, the means shall be taken to be half the total means of the couple.
I have already dealt with and explained that in some detail. Put in a nutshell, the amendment means that if one of a married couple dies, no question will be raised to deprive the survivor of the pension that that survivor enjoyed while he had his partner. It is also proposed, as I mentioned before, to repeal completely Section 7 of the Act of 1924. That section provided that if within three years before, or at any time after a person received an old age pension, property or income was assigned "such property or income shall be taken into account in calculating for the purpose of the Old Age Pensions Acts... the means of that person unless it shall appear that the assignment was a conveyance or transfer by operation of law or was a conveyance or transfer on a bona fide scale for valuable consideration in money or money's worth amounting to not less than four-fifths of the value of the property or income or ...that the property comprised in the assignment consist only of a farm of land the poor law valuation whereof (including the buildings thereon) does not exceed £10...." Leaving aside altogether the various interpretations of that section and the draftsmanship of the section—I do not think we need waste the time of the House in discussing that—the section, at any rate, conceded the right to the farmer to assign his farm. If the farm was under £10 valuation, the farmer could apply for the pension immediately after the assignment and not have the income from that farm taken into consideration in estimating his means. If the farm were over £10 valuation, the farmer could, at the expiration of three years, apply for the pension without having the income from that farm taken into consideration in calculating his means. I cannot see— I am open to conviction on the matter—that a case can be made, once the principle of assignment is conceded, for making a man wait three years after the assignment to qualify for the old age pension without having income from the farm taken into consideration. In practice, the section has always meant that the farmer who was well up in the law, or who could afford legal advice or who had people well up in the law taking an interest in him, assigned his farm at the age of 67. When he became 70 years of age, he became, if otherwise qualified, entitled to the old age pension without having the income from that farm taken into consideration. But if he were an unfortunate man without friends to advise him—he might, perhaps, be illiterate—he did not assign his farm until he was 70 years of age and he discovered then that he had to wait three years until he was 73 years of age—before he could get the old age pension without having the income of the farm charged up against him. If the principle of assignment is conceded at all, I think we should not put up barriers, and we should certainly not put up barriers which will operate against the most defenceless of this particular class of the community.
Probably again it will be said that the principle of assignment should not be conceded at all. Again, that is a question that is open to debate and it can be freely granted that there are two sides to it. But, again, if the State can afford to pay a two-thirds retiring allowance to people paid a sufficiently large salary, perhaps, to make provision for their old age, and if all public officials can retire on a large pension reaching two-thirds of their maximum earning capacity, I think that that class of the community who put up these pensions, and who put up these salaries in the form of taxation, ought to be allowed to retire when they reach a condition of life that they are no longer able to look after themselves.
I hope that during the course of the debate on this Bill Deputies will approach the matter in a reasonable spirit, and that they will not take up the time of the House advancing the theoretical arguments that may be advanced practically against any common sense suggestion, either in the way of legislation, or in any other form. I would be sorry that advantage would be taken of this Bill by any section of the House to make political capital out of it, or to try to approach it from the political point of view. We are trying to do the best we can, as we see it, for the most deserving section of the community, and I venture to hope that this Bill will have the support of a majority of the House.