Monday, 20 August 2012
Veterans' Affairs Legislation Amendment Bill 2012; Second Reading
As I stand here, the Minster for Veterans' Affairs is in front of me at the desk. It is great to hear him and see him sitting here for the entire debate. I thank you, Minister, for coming to listen to this important debate. I know that, deep down, you want to do the right thing. The issue is that, since 2007, the government in which you, sir, are a minister has led the nation to believe that you would fix it. In fact, the member for Eden-Monaro, who is currently the Parliamentary Secretary for Defence, together with Senator Kate Lundy, who is the Minister for Sport, sent a letter to the former Minister for Finance and Deregulation, Lindsay Tanner, dated 14 September 2009. I will quote from that letter so we can all hear the words clearly. It said:
Significantly, many people genuinely believe that prior to the 2007 election, the ALP had committed to determining a "fairer" method of indexation, and a 'review' would provide the direction …
It is entirely appropriate, fair and consistent with our election commitment that the introduction of this improved indexation arrangement should coincide with that for pensions and benefits as announced by Minister Macklin.
These are the words of the current Minister for Sport and of the Parliamentary Secretary for Defence—a close colleague of the Minister for Veterans' Affairs, who is sitting here tonight. They have both unequivocally called upon the government to honour what it led the Australian community to believe in 2007—that it would index military DFRDB and DFRB pensions.
Their words have only been met with more obfuscation. Let us not forget that Labor failed to respond to the Podger review, which was released publicly back in December 2007—it was released 4½ ago and the government has not officially responded to it.
Mr Snowdon interjecting—
Let us not forget the Matthews review, Minister, which I hear you talk about. I believe you spoke to and, indeed, commissioned the Matthews review. It was a whitewash in name, it was a whitewash in fact, it was a whitewash in substance and it was a whitewash of the government's own false election commitment. There have been 10 high-level inquiries into military superannuation indexation, all of which—except for yours, Minister—recommended changing the current arrangements. Yours was the only one which—surprise, surprise—said that we should keep the status quo. That is 10 to one. Where I come from, Minister, three to one and you are out.
It does not stop there. Labor's finance minister, Senator Wong, and veterans' affairs minister, the Hon. Warren Snowdon, who is at the table tonight, launched an ongoing scaremongering campaign in an effort to distract from Labor's lack of policy. Their argument is that the cost of fair indexation is too high. Minister Wong claims that the coalition's $100 million cash cost is actually $1.7 billion, and that the scheme will cost $4.5 billion to fully implement. The finance minister, like Minister Snowdon, is being deliberately misleading. The cost of the forward estimates in cash terms is between $100 million and $150 million, depending on which view you take. That is it in cash terms, and no-one argues with that.
In terms of accrual accounting, yes, the cost goes into the billions of dollars over the next 40 years. But when was the last time you heard a debate on increasing age pensions in this House that looked at the cost over 40 years? When was the last time that was done? We deal with everything in this House in cash terms. We deal with every announcement in cash terms. We deal with every single increase in pensions in cash terms. To be completely consistent, in line with everything else that the House does we should deal with this issue in cash terms. And, when we deal with this issue in cash terms, over four years, we come to between $100 million and $150 million.
This point was reinforced by the Commonwealth Actuary during the debate surrounding my Fair Indexation Bill. In advice to Finance Minister Penny Wong in January 2011, the Commonwealth Actuary, Michael Burt, said:
… great care should be exercised when using fiscal balance figures for decision-making purposes, particularly in the area of unfunded superannuation arrangements.
He blew an almighty hole in Labor's claims that the cost of fair indexation is too high. The cost to the Commonwealth of fair indexation over the next four years is approximately $100 million. The government have told me it is about $150 million. I am happy to accept either amount. And that is before any clawback, because of course it is taxable. It is not the inflated $1.7 billion that the Labor government claim by confusing the accrual side with the cash side. In the first year, it is something like $5 million or $6 million, and then it increases slowly. It would be between $100 million and $150 million to achieve that. Compare that to the $4.7 billion the government have spent because they rolled back the proven Howard government border protection policies, the Pacific solution, out of pride, which has led to the debacle we have right now. Can you imagine what that $4.7 billion could have been spent on if this government had left proven border security solutions alone? And we are talking about $100 million to $150 million.
In negotiating with the Greens, the leader of the Greens at the time, Bob Brown, asked me to come up with savings—how we would pay for this prior to the vote on our private member's bill in the Senate. In a Defence, Foreign Affairs and Trade committee hearing, I questioned the then Defence secretary, Dr Watt, and Mr Minns, Deputy Secretary, People Strategy and Policy Group, about the 12.8 per cent increase over the forward estimates for public servants. They indicated that because of a range of things, notwithstanding the government's cut to the Defence budget, that increase would not be as high. I suggested 30 per cent less and they agreed, which came out to about $200 million to $250 million, which I took to Senator Bob Brown as the savings. The Greens actually promised in 2007 and 2010 to index DFRDB pensions; but, when given the savings so they would be true to their promise and put it in writing, they still voted against it. And—surprise, surprise—the Minister for Defence, a number of months later, announced savings of exactly the same quantum as I brought up in the foreign affairs, defence and trade committee meeting. I indicated where the savings could be, where the money could be found in the budget. The government then, a few months later, took those exact numbers and pocketed that exact amount of money. That money was identified to fund, over the forward estimates, the indexation of super, but they took the savings and dudded 57,000 veterans and their families.
The tragedy is that we have come to expect this from a government that cannot even put pink batts in roofs without blowing $2½ billion, that cannot put up school halls without private schools getting a 60 per cent advantage over public schools because of the wasted $5 billion that went to Labor state governments. There is the $36 million spent on advertising the carbon tax and, of course, there is the $4.7 billion spent rolling back the border protection solutions that worked and on which the government have now done an amazing backflip. The money was found, it was identified, but the government pocketed it and delivered nothing.
More recently, the Minister for Veterans' Affairs, Mr Snowdon—who is at the table this evening—argued that a superannuant on $58,000 per year did not need fair indexation, that they were already well off. Labor's politics of envy are alive and well when it comes to military superannuants. What Minister Snowdon failed to acknowledge, however, is that the average DFRDB military pension is just $24,386—2½ times less than the figure he quoted in June. Labor is misleading the public. Furthermore, in June, veterans were sent letters offering them a few cents extra per fortnight in their pensions. Many veterans received an increase of less than $1 per fortnight. As Tony Abbott said on Brisbane radio in 2010:
You can turn this into a huge figure. In any one year, it is bearable and we should bear it.
At the last election, we identified more than $50 billion in savings to specifically meet the costs of this commitment. More specifically, I identified over $200 million in savings on Defence personnel, savings the minister re-announced two months later and that he pocketed, that was not spent on indexing pensions.
On another matter of importance regarding the bill, when this legislation passes the House, the coalition will seek to further amend the legislation to deliver fairness for disabled veterans with high pharmaceutical costs. Labor's Pharmaceutical Reimbursement Scheme is flawed and unfair. It has created two classes of disabled veterans—those with qualifying service and those without. Up to 1,500 of our most disabled veterans get no assistance from the scheme. These are our most disabled veterans who receive the special rate, or TPI, pension but who do not have qualifying service as defined by the Veterans' Entitlement Act 1986.
The coalition has a better way. At the last election we proposed a comprehensive veterans' pharmaceutical reimbursement scheme which would deliver financial relief to more than 80,000 disabled veterans. Importantly, it did not create two classes of veterans and ensured that all of our most disabled veterans had no out-of-pocket pharmaceutical expenses. The coalition's scheme was also immediate. There were no cumbersome requirements nor was there any need for technical amendments, as this legislation proposes, to ensure the scheme functions properly. Under the coalition scheme, a veteran who qualified for the scheme would pay for only 30 scripts per year. Once they reached this veterans' pharmaceutical safety net, they would pay no more for their scripts. This meant immediate financial relief for veterans. Significantly, the coalition scheme did not require cumbersome reimbursements; Labor's scheme leaves veterans waiting for the calendar to tick over to a new year before they receive any financial relief for the cost of pharmaceuticals.
In the Senate, the coalition will move amendments to extend eligibility for the veterans' pharmaceutical reimbursement scheme to include all special rate, or TPI, ex-service pensions. Our amendments will extend the coverage of the scheme beyond just disability pensioners with qualifying service to also include all special rate pensioners. These amendments will bring fairness and justice to Labor's flawed and unfair scheme and will cost up to $234,000 per year, based on the government's advice about the average cost of the reimbursement and the approximately 1,500 special rate pensioners without qualifying service.
The government's scheme is budgeted to cost $30 million over the next four years, making this extension a very modest additional cost to provide the fairness disabled veterans deserve. This is a small price to pay to ensure our most disabled service personnel are not further disadvantaged by Labor's unfair Pharmaceutical Reimbursement Scheme. If successful in the Senate, I will be supporting the Senate's request for the House to amend the legislation in this respect. I look forward to doing so—the Minister for Veterans' Affairs and Minister for Defence Science and Personnel, Mr Snowdon, is at the table.
Providing fair indexation for Australia's DFRB and DFRDB military superannuants is the right and proper thing to do. My amendment to the Veterans' Affairs Legislation Amendment Bill 2012 has only been necessary due to the continual intransigence of this government.
Last week I spoke in response to the ministerial statement by the Minister for Defence. The member for Eden-Monaro and Parliamentary Secretary for Defence, the Hon. Dr Mike Kelly AM, was also at the table. I had heard he had been saying to his veterans groups that he would be seeking at a later juncture to move a private member's bill to index DFRDB pensions the same way as we are seeking to do. I said to the member for Eden-Monaro: I've heard this. I'm happy to be wrong. I'm happy to apologise if I'm wrong, and I'll provide every assistance, on indulgence, for the member for Eden-Monaro to rise from his seat, to approach the dispatch box, to point out the error of my ways and to say I'm wrong and that that was not his intent or, if it was his intent, to move a private member's bill straightaway.' The member for Eden-Monaro did nothing. He did not move. His silence was acquiescent and he walked out of the chamber. He had the opportunity to say, 'I was wrong,' and I would have apologised, but he did not because he has no intention of moving a private member's bill. He is all talk and no action on this. He was all talk and writing letters, all signatures in ink, when he wrote to the then finance minister, Minister Tanner. But when the rubber hits the road and he is called to the dispatch box to either refute—and I would back down—or to back up his words with action, he shrunk like a wilting violet. The member for Eden-Monaro is a fine man. He is a decent Australian, but he failed that test on that day last week.
I urge all to support this amendment. I look in front of me and there is the member for Blair waiting to speak next. The member for Blair said in relation to the latest CPI increase:
It is ridiculous to expect people to accept a 0.1 per cent increase. That is unviable, given the cost of living. It is too meagre and it needs to change. The current situation is unsustainable. It's become exacerbated by a series of fairly low CPI rises ... the Government needs to look at this again.
I say to the member for Blair that I have read your comments faithfully, sir. If I have not, stand and correct me. If they are indeed your words—and I know they are—join us in indexing fair and equitable military superannuation. Match your words with action. Do that. You have the chance tonight before the vote comes tomorrow. The Greens said in their 2010 election policy:
In a long-running campaign, current and former... defence force personnel have been pushing to ensure their superannuation pensions are indexed fairly and appropriately. It is a campaign the Australian Greens support wholeheartedly.
Except when a private member's bill is in the Senate, except when savings are identified and at the time they needed to match the words that they took to an election, the Greens were found wanting. Bob Brown said in March 2011:
At the outset I should say that fair indexation is consistent with the Australian Greens policy at the last election.
He said that when he needed the votes of 40,000-odd Tasmanians but when it came time to vote in the Senate he was found wanting. One of the Independents in this House, the member for Dobell, Craig Thomson, said of supporting fair indexation:
I am the only MP of the Central Coast who is prepared to support them—there are two others who won't.
When this comes to the vote, I expect the member for Dobell to be a man of his word and to back up those statements, as I expect of the member for Blair, whom I know to be a man of his word.
I know the member for Denison, Andrew Wilkie, has also publicly supported fair and equitable indexing of DFRB and DFRDB in the past. He said:
The ALP should be condemned for not doing something about it since its election in 2007.
He also said:
Defence Force retirees in particular, would be better cared for if the unsatisfactory indexing of defence pensions were overturned in favour of a system that at least keeps up with the cost of living.
The Independent member for Lyne, Rob Oakeshott MP, has moved two motions in the House of Representatives calling for fair indexation. The last motion was seconded by the member for New England, Tony Windsor. The member for Lyne said:
… there are many in the community who are aggrieved and their concerns deserve to be heard in this House. There are many who are frustrated that government, report after report, seems to get the concerns about a lack of purchasing power within the current military superannuation scheme, yet, when it comes to actually doing something about it, the arguments of cost and difficulty in making those changes seem to be directed towards those who have done military service.
I want it be recognised that Defence service is unique within the Public Service.
… … …
… the uniqueness of Defence service lies in defending the nation, our sovereignty and our freedoms.
They are fine words from the member for Lyne. He continues:
I would hope it is generally recognised that CPI is not a good indicator for cost-of-living measures and for purchasing power.
… … …
In my view the alternatives that are worthy of consideration are in the form of the age and welfare pensions, which are indexed by the new living cost index, to reflect the failings of CPI in the pensioner and beneficiary living cost index, or the male total average weekly earnings, whichever is the greater.
The Independent member for New England, Tony Windsor, in 2010 asked the Minister for Finance and Deregulation, Minister Lindsay Tanner:
What measures will he take, and when, to address the ongoing concerns within the veteran community that (a) the indexation of military superannuation pensions against the Consumer Price Index is not an accurate measure of the cost of living, and (b) inequality exists between the indexing of military superannuation pensions and other pensions such as age and welfare; and will he consider introducing a fairer indexation method for military superannuation pensions in line with that used to calculate age and welfare pensions.
In conclusion, prior to the 2007 election the Labor Party indicated that they would index pensions. Many of their front bench wrote to Minister Tanner seeking the indexation of pensions. Many of the Independents, as I have just quoted, have publicly stated their desire to index military pensions. The cost is about $100 to $150 million in cash terms over the next four years. Savings of up to $250 million were outlined in the private senator's bill in the Senate last year. Within two months of that private senator's bill being defeated by Labor and the Greens the Minister for Defence acted on those savings and pocketed that money. It was promised, the Independents have backed it, the money was outlined, the money was found, and the money was pocketed.
There is no reason this parliament this week should not join with and support the coalition in saying that no more steps will be taken in this area and on this bill until the fair indexation of DFRB and DFRDB pensions is addressed. We call on those who have publicly called on this issue, those who have made a point of this issue and those who have stood on soapboxes on this issue to seek votes to now stand and put their vote where their mouth is and support the coalition on indexing pensions.