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

Yes. Whoever is liable, the fact of the matter is that there is potentially legal obligation and legal litigation in the wind on behalf of these 1,800 employees. Labor believes that, given the agreement between Telstra and the government and also the constitutional issue that I referred to earlier, whoever is responsible for this action—and we believe the primary responsibility for it lies with Senator Minchin and Senator Coonan—should be aware that it is probably illegal. Of course, that is to be established if the matter goes to court.

Further, I asked Senator Minchin in the Senate last week whether he had sought advice from the government pension regulator, the Australian Prudential Regulation Authority, known as APRA, on the legality of cutting a promised pension benefit. Labor is certainly aware that where cuts to pension promises have been made with the closure of defined benefits in other circumstances—and there was a recent circumstance involving AXA, a well-known private superannuation fund which cut benefits to their employees—the regulator has stepped in and ensured corrective action was taken.

Accordingly, Labor will move a second reading amendment to this bill. It is the only mechanism we have before the Senate to attempt to deal with this matter. The amendment states that we regret the fact that the government has offered no such protections to the up to 1,800 existing Telstra employees who are currently members of the CSS and will have their membership terminated as a result of Telstra 3 privatisation; we consider that the pension promise made to those employees will not be met as a consequence and we believe that is a matter of fact; and we note that comparable provisions have been made to ensure the pension promise is met, for example, with respect to the Qantas privatisation.

We condemn the government for their failure. They have had this matter drawn to their attention on a number of occasions, yet they have not acted in this regard. They have acted with respect to long service leave entitlements but not with respect to the pension promise made for the 1,800 employees who are still in the CSS. We call on the government to immediately rectify the position for these disadvantaged Telstra employees. I have been dealing with superannuation issues for a lengthy period. I cannot recall a case either in the private sector or in the public sector where, as a consequence of a change of ownership of a company or authority, the pension promise made in a defined benefit fund has been cut in the way we are considering here today. I cannot recall a case where this has occurred, and for good reason: I suspect it is unconstitutional to remove a benefit without compensation or some effective comparable alternative being offered. I think the government could find themselves in very significant legal hot water as a consequence of the course they are determined to embark upon. Telstra could possibly find itself in hot water as well, but I do not blame Telstra. In this process they are following the command of the incompetent ministers, Senator Minchin and Senator Coonan.

Frankly, I cannot understand why the Minister for Finance and Administration, Senator Minchin, has not sought to address this issue. Senator Minchin well knows that, if he had attempted to deal in the same way with parliamentarians’ entitlements on the closure of the defined benefits scheme, he would not have left this place alive. Yet here we are dealing in a manifestly unfair manner with the pension promise made for some 1,800 Telstra employees. Whatever we think of the merits—in Labor’s case, the lack of merit—of the privatisation of Telstra, there is an important issue in principle here: a promise made with respect to a pension benefit in particular must be kept. Not only is it unethical not to keep the promise by ensuring that there is a comparable benefit offered or at least compensation but Labor believes that this matter poses a serious question legally for the government and for the Telstra corporation down the track in the commitments given when the government signed its memorandum of understanding with respect to Telstra employees’ superannuation benefits and the possible constitutional question that surrounds the manner in which these Telstra employees are to be treated.

As I said, we have not had a response to my question to the minister about whether this matter was referred to the pension regulator APRA. I think we will hear more about this particular issue. It is a further example of the botched regulatory issues around the T3 privatisation. Frankly, it is an added uncertainty that will put a question mark over Telstra going forward once the T3 privatisation process is concluded. It is an added uncertainty which should have been dealt with in ensuring not only the preservation of a promise made to employees going forward but also certainty for shareholders and potential shareholders who will become engaged in the T3 process. On behalf of the Labor opposition, I move:

At the end of the motion, add “but while welcoming the fact that the Government has extended long service leave protections to Telstra employees for a period of 3 years following the time that the Commonwealth ceases to have a controlling interest in Telstra, the Senate:

        (a)    regrets the fact that the Government has offered no such protections to the up to 1800 existing Telstra employees who are currently members of the Commonwealth Superannuation Scheme (CSS) who will have that membership terminated as a result of the Telstra 3 privatisation;

        (b)    considers the fact that the cessation of CSS membership will mean the Government’s pension promise made to Telstra CSS members will not be kept;

        (c)    notes that: no comparable provision has been made to ensure the pension promise is met, as occurred in the Qantas privatisation;

              (i)    Notes that no other compensation is provided for;

        (d)    condemns the Government for its failure in this regard; and

        (e)    calls on the Government to immediately rectify the position for these disadvantaged Telstra employees”.