Kate Lundy (ACT, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Hansard source

It is no secret that I have continued to seek a way to improve the method of indexation for Defence and other Commonwealth superannuation pensions. Unfortunately, this bill is not the answer. We do acknowledge the unique nature of military service and our debt to our service men and women, and I welcome the acceptance of the motion of support to this effect in the House of Representatives on 2 June and support the expression for fair indexation. I also accept, as I have often argued, that the CPI is no longer an accurate measure of the changes of the cost of living. This has been acknowledged by the Australian Bureau of Statistics and the government, and I have therefore agreed that a better measure of indexation for military and other Commonwealth superannuation pensions should be developed. This was the reason for the Labor government's develop­ment of the PBLCI, the pensioner and beneficiary living cost index, which has already improved the standard of living for pensioners, including those military and civilian superannuants whose Common­wealth pensions fall below the age pension income and asset levels.

That the CPI alone is no longer the best measure of changes in the cost of living was also recognised in the Matthews review of pension indexation arrangements in Australian government civilian and military superannuation schemes. One of its recommendations states:

If a robust index which reflects the price inflation experience of superannuants better than the CPI becomes available in the future, the Australian Government should consider its use for indexing Australian Government civilian and military superannuation pensions.

The government's commitment to fiscal responsibility and to returning the budget to surplus by 2012-13 is and must be of paramount concern. This government is proud of its handling of the global financial crisis and the way we are coping with the costs of this year's natural disasters in Australia—and we are proud of our responses to the disasters and distress of neighbouring countries—but we know that, consequently at this time, all new expen­diture must be offset by savings over the forward estimates. The proposals for this bill do not satisfy this criterion.

In initially providing estimates of the cost of this bill to 2014-15, the Minister for Finance and Deregulation, my colleague Senator Wong, noted that no offsetting savings were proposed. The bill's explana­tory memorandum proposed only that the costs could be met through the accrued funds of the Future Fund, but this assertion has been challenged by the Department of Finance and Deregulation and by the Government Actuary.

This bill is divisive. A major problem is that it unfairly applies to only a section of the Defence superannuants and debars over 7,200 current Military Superannuation Benefits Scheme superannuants, as well as the future beneficiaries of the MSBS—and, of course, all other Commonwealth super­annuants, including those employed in the Department of Defence. This point was made in many of the submissions to the Senate inquiry, even those in support of the bill. The Australian Veterans and Defence Services Council, for example, noted that the bill was 'a start' but would not overcome the financial problems of all veterans. I have had emails and messages from Commonwealth defence and civilian pensioners who have long campaigned for measures such as those outlined in the bill but find that they have been excluded from its provisions. In the context of the bill's title, 'Fair Indexation', is it fair to discriminate in this way?

In March the Senate referred the bill to the Senate Finance and Public Administration Legislation Committee, which considered departmental and public submissions and reported on 10 May. The committee recom­mended that the bill not be passed. Coalition senators presented a dissenting report. The Department of Defence submission to the Senate committee opposed the bill, reasoning that the military superannuation schemes had been designed to reflect the unique nature of military service and did already provide benefits well in excess of the community standard. Any requirement for Defence to fund the changes proposed by the bill would significantly impact on Defence funding for ongoing programs. The Senate Finance and Public Administration Legislation Com­mittee agreed that the unique nature of military service is already reflected in pro­visions and entitlements. It also highlighted that significant factors in its assessment were the impact on the government's fiscal position and the ability of the Department of Defence to deliver ongoing programs. The committee pointed to the gap between the target level of assets required in the Future Fund and the actual level of assets in the fund and stated that 'the game would be exacerbated if the bill is passed'.

I would like to acknowledge the com­mitment and hard work of those who have made submissions to this inquiry despite the difficult time constraints. Some of the individuals who have made extremely useful contributions were constituents of mine. I would like to mention in particular the ongoing and valuable work of Peter Thornton and Bert Hoebee. I remain committed to trying to improve the indexation methods applying to military and civilian Commonwealth pensions and will continue to do so within the fiscal constraints and all of those factors that do apply. I will continue to work with representative organisations such as DFWA, SCOA and ACPSRO, to whom I am indebted for their ongoing advice. I am convinced, as I think we all are, that the CPI no longer provides the kind of indexation that responds to the cost-of-living needs of this group of superannuants and pensioners, and I have sought advice on the development of the new analytical living cost index to reflect more accurately the cost of living of military and civilian superannuants, including those to whom this bill would apply.

I challenge the empty rhetoric and the feigned indignation of Senator Humphries and others opposite with respect to my constituency here in the ACT. You do not need to look too far into the policies of the coalition and their attacks on Canberra and the Australian Public Service—to the tune of 12,000 jobs; that still stands as a coalition policy. It exposes the duplicitous nature of their presentation here to feign concern for the welfare of superannuants while attacking the very jobs for the people who will find themselves on a Commonwealth super­annuation pension at some point in the future. So let us not stand here and feign indignation. This bill is divisive in its character and nature. I understand what you are trying to do—tap into the discontent that prevails right across Commonwealth and military superannuants—but this bill does not achieve it. It is, I think, an attempt to tap into sentiment without providing any solution whatsoever.