Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Hansard source

The Senate is dealing with the Long Service Leave (Commonwealth Employees) Amendment Bill 2006. Labor supports this bill, which was introduced into the parliament last week. While Labor does not support the sale of Telstra, Labor does support protecting those employees who are at risk of being adversely affected by its sale. The purpose of the bill is to extend the operation of the Long Service Leave (Commonwealth Employees) Act’s coverage of Telstra employees for three years from the day on which the Commonwealth ceases to have a controlling interest in Telstra.

Telstra employees currently accrue long service leave entitlements under the Commonwealth long service leave act, which is three months long service leave after 10 years of service. However, the Telstra (Transition to Full Private Ownership) Act of 2005, the transition act, overrides this and means that Telstra employees will stop accruing benefits under the long service leave act from the day the Commonwealth ceases to have a controlling—that is, majority—interest in Telstra and includes savings provisions for Telstra employees’ long service leave entitlements accrued up to that day. The proposed amendments to the Commonwealth long service leave act would defer the operation of the substantive and savings provisions for three years after the day upon which the Commonwealth ceases to have a controlling interest in Telstra to provide Telstra employees with some degree of certainty about their accrued and future long service leave entitlements.

The Telstra (Transition to Full Private Ownership) Act of 2005 already protects pre-privatisation long service leave entitlements accrued by Telstra employees, and this bill does not affect that. The intention of extending coverage of Telstra employees under the long service leave act for a period of three years from the day when the Commonwealth ceases to have a controlling interest in Telstra is to provide certainty to Telstra and to those employees who have not yet concluded alternative long service leave arrangements post-privatisation.

The bill seeks to minimise any negative impact of the sale on Telstra employees so far as long service leave entitlements are concerned by providing a three-year transition period for employees in Telstra to come up with alternative arrangements. While ultimately the form of arrangement that Telstra and its employees decide is up to them, Labor would certainly encourage Telstra to continue to offer employees—certainly existing employees—long service leave entitlements at the existing levels once the transition period has expired unless Telstra employees agree otherwise. A promise has been made—effectively a contractual obligation that should be met.

Telstra staff are currently employed under either a certified agreement which expires in August 2008 and provides for long service leave at the Commonwealth long service leave act rate or AWAs which provide long service leave which will be paid in accordance with Telstra policy but which cannot be lower than the relevant state legislative minimum. The amendment will provide certainty for employees, both for those who are under the existing certified agreement and for those who are currently engaged on AWAs, that their entitlements will not fall below current levels for the next three years. However, unfortunately, this approach is not being replicated by the government’s approach to the superannuation entitlements of some existing Telstra employees. The Liberal government has failed and is continuing to fail to guarantee the rights of, and the pension promise made to, approximately 1,800 Telstra employees who, as a result of the sale of the Commonwealth’s majority interest and as a consequence of a government policy decision, will be required to terminate their ongoing membership of the Commonwealth Superannuation Scheme, known as the CSS.

On 7 September last year Labor asked in the Senate the Minister for Finance and Administration, Senator Nick Minchin, explicitly about this issue and he replied: ‘Superannuation conditions would continue.’ That was a response in respect of Telstra workers once the company was sold by the government. But he has misled the Senate on this issue. The T3 prospectus states on page 51:

Telstra employees who are members of the Commonwealth’s Superannuation Scheme will cease to be eligible employees for the purposes of the Superannuation Act 1976 and will no longer be entitled to contribute to the CSS.

This will have significant—it will vary from employee to employee—adverse financial consequences for those 1,800 Telstra employees. In a number of questions to the minister for finance last week on this matter I, on behalf of Labor, drew the attention of the Senate to the adverse consequences for these 1,800 employees.

The CSS is a defined benefits scheme which provides a pension promise at a given age—55 or beyond—based on a formula of years of membership. The CSS was available to Commonwealth government employees and closed to new entrants in 1990. In Australia, when a defined benefits scheme in either the public or the private sector is closed, existing member benefits and the pension promise made are maintained in principle. It is new employees from the shutdown date who enter the new, usually lower level defined benefit contribution scheme or fund; hence, the pension promise that has been made is kept and preserved for the member.

Labor believes this is a sound approach both in principle and in law. A promise made, particularly one concerning a retirement benefit pension, should be kept. Labor believes that this is not just an important principle but also the correct legal approach. I pose the fundamental question: can a guaranteed benefit made under contractual obligation be removed without compensation or a comparable alternative superannuation benefit being offered?