Warren Snowdon (Lingiari, Australian Labor Party, Minister for Defence Science and Personnel) Share this | Hansard source

I thank the member for Fisher for his question. I remind the House what this question is about. It is about whether or not the Defence Forces Retirement Benefits Scheme, which closed in September 1972, and the Defence Force Retirement and Death Benefits Scheme, which closed in September 1991, are appropriately indexed. They are indexed to the CPI. This matter was reviewed by Matthews in 2008. He came to the view that it was an appropriate method of indexation. Nevertheless, there is an issue which has been created in the community by some people within the ex-service organisations trying to conflate the issue of fair indexation, as you describe it, with indexation of age pensions and other income support payments.

It is very, very clear—and we need to comprehend this—that military superannuation retirement pay provides a lifetime guaranteed level of income and indexation, regardless of the person's other income or assets, and is not affected by investment returns. The bulk of the people who have retired after 20 years of service, which they are entitled to do under the schemes, are able to take lump sum payments and in excess of 99 per cent did. It is a good scheme. The benefits after 20 years of service commit up to five times the annual superannuation retirement pay for a lump sum in exchange for a reduction in the annual payment. They give a higher percentage of final salary compared to other Commonwealth schemes and have a government employer contribution of around 30 per cent compared to the current national standard of nine per cent increasing to 12 per cent.

This is not and cannot be compared to an income support payment. It is not. Unfortunately, the discussion going on in the community—promoted, I might say, by the opposition—is that somehow or another if you do not index the DFRB and DFRDB payments to the same level as age pensions then you are being unfair. I am very conscious of the issues that have been raised in the electorate. We are continuing to work on the issue. You are right that the department of finance is looking into the issues. We expect we will have more to say in the very near future.

Let me finish with the words of the former coalition minister for finance, who confirmed this last year, when he said:

This particular claim was properly rejected by the Howard Government, of which I was a member … there is no inherent logic.

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