Senate debates

Monday, 15 June 2015

Bills

Governance of Australian Government Superannuation Schemes Legislation Amendment Bill 2015; Second Reading

11:16 am

Photo of Carol BrownCarol Brown (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary for Families and Payments) Share this | Hansard source

The Governance of Australian Government Superannuation Schemes Legislation Amendment Bill 2015 merges ComSuper, the provider of administration services in relation to the Australian government's civilian and military defined benefits superannuation schemes, with the Commonwealth Superannuation Corporation, the CSC, the trustee of the Australian government schemes. CSC, a corporate Commonwealth entity for the purposes of the Public Governance, Performance and Accountability Act 2013, will be the continuing government entity and will have responsibility for the overall management of Australian government superannuation schemes, including both trustee and administration services roles. The relevant schemes are the Commonwealth Superannuation Scheme, the CSS; the Public Sector Superannuation Scheme, the PSS; the Public Sector Superannuation Accumulation Plan, the PSSap; the Military Superannuation and Benefits Scheme, the MSB; the Defence Force Retirement and Death Benefits Scheme, the DFRDB; the Defence Forces Retirement Benefits scheme, the DFRB; the Defence Force (Superannuation) (Productivity Benefit), the DFSPB; the 1922 scheme; and the PNG scheme.

CSC will have similar responsibilities in relation to the proposed new military superannuation arrangements, which will commence on 1 July 2016, subject to the passage of proposed legislation. The merger will improve the efficiency of the management of the Australian government superannuation schemes by removing duplication and overlap that exist as a result of two government bodies being involved in the delivery of administration services. The merger will provide CSC with control over the delivery of administration services in relation to the Australian government defined benefit superannuation schemes, consistent with its regulatory responsibility as trustee of the schemes.

It is important to note the bill does not change the benefit design of the civilian and military superannuation schemes. The bill also does not change the composition and the structure of the board of CSC, the trustee of the affected funds. The merger is expected to deliver savings of $0.5 million per annum. The changes that relate to the PSSap administration fees have estimated savings of $26.8 million over four years from 2015-16.

I will flag at this stage that Labor will be moving amendments to this bill, which have been circulated, when it comes to the committee stage. Labor does not oppose reducing duplication and finding efficiencies within the Public Service. Labor is very concerned that ComSuper staff who move to CSC are being transferred away from the APS and will lose their ability to apply for jobs in, and to transfer at level to, an APS agency and will be disadvantaged compared to APS employees. This is particularly important in Canberra, where the ComSuper staff are based and the majority of available jobs they may wish to apply for will be within the APS. If the government is determined to compulsorily transfer ComSuper employees to CSC, it should ensure all rights and entitlements are protected. Labor's amendments will protect these employees, who face an uncertain future, to achieve this and not affect the efficiency of the CSC. I will speak in more detail on the amendments later.

Administering the defined benefit superannuation schemes will require the CSC to draw on Commonwealth appropriations to pay superannuation benefits to members of the scheme, collect administration fees payable by the Commonwealth under legislation governing the schemes and recover debts owing to the Commonwealth, for example, arising from the overpayment of benefits. As CSC is a separate legal entity to the Commonwealth, the bill includes provisions to legally enable CSC to perform these functions on behalf of the Commonwealth. As the Commonwealth remains legally responsible for the functions, the bill enables the minister to make instruments in relation to these functions. These powers are currently available to the minister under the administration of ComSuper.

A CSC special account will be established. Administration funding, including administration fees collected by CSC on the Commonwealth's behalf from agencies with employees in the Australian government schemes, will be credited to the account. The account will form part of the CRF, and CSC will be able to debit the account to, among other things, pay costs incurred in the performance of its role as administrator.

As a result of the merger the statutory office of CEO of ComSuper will cease and the statutory agency of ComSuper will be abolished. ComSuper staff whose employment is transferred to CSC will become non-APS employees of CSC engaged under section 26 of the Governance Act. This will be achieved by determination of the Australian Public Service Commissioner under section 72 of the Public Service Act 1999. The transitional provisions in the bill will assist in maintaining the terms and conditions of employment of ComSuper staff on transfer to the CSC and meeting legislative requirements governing the transfer. Currently there are roughly 400 employees at ComSuper and, because of job duplication that may occur in the merger, a voluntary redundancy program will be undertaken. The targeted number of voluntary redundancies is 70 positions.

The merger is the single, largest forced transfer of employees out of the Public Service since the Australian Protective Service was removed. Concerns have been raised that because merger means that ComSuper will cease to exist—that is, staff will be compulsorily transferred out of the Australian Public Service to the CSC—but this forced change will affect their careers and make it more difficult to move to an APS agency. In the event that the new CSC downsizes, staff are also concerned at losing the redundancy rights that would allow them to be redeployed in the APS if their positions are cut.

As I flagged earlier, Labor will move amendments to this bill when it reaches the committee stage. Labor's amendments, which have been circulated, address these concerns by providing transfer ComSuper employees with the equivalent mobility rights to those they would have had if they had remained employed in the APS. Labor's amendments enable transferred ComSuper employees to move from CSC to APS agencies as if they were still an APS employee. These measures in Labor's amendments will ensure that ComSuper employees who transfer to CSC will be able to transfer at any level or win promotion to APS roles in other agencies. Labor's amendments ensure ComSuper employees who transfer to CSC are not disadvantaged in seeking and applying for a future role within the APS. Labor's amendments will apply for a period of three years. Our amendments are simple and sensible changes that address the concerns of ComSuper staff. I understand that the government has indicated its support for these amendments, and this is very welcome.

I am turned now to the substance of the bill. The bill includes consequential amendments to a range of the Commonwealth legislation governing the superannuation schemes to take account of the merger. In addition to dealing with matters arising from the transfer of ComSuper staff to CSC employment, the bill contains provisions that deal with a number of other transitional matters arising from the merger. This includes provisions to transfer the assets and most of the liabilities of ComSuper to CSC. To maintain consistency with the treatment of the administration funding currently received by ComSuper for provision of administrative services, the bill makes CSC exempt from income tax in relation to funding received from the Commonwealth for this purpose.

The other significant measure in this bill deals with the collection of the cost of administering the PSSap. The Governance Act and the 2005 act, which governs the PSSap, will be amended by the bill so that the cost of administering the PSSap will be deducted from member accounts, consistent with arrangements that apply in private sector accumulation superannuation funds. The changes that relate to PSSap administration fees have estimated savings of $26.8 million over four years from 2015-16. Until now, the government has covered the costs of administering the PSSap for its members. There are 127,628 members of the PSSap. While this bill will allow the CSC to set administration fees for the benefit of members, a rough, back-of-the-envelope calculation is that it will cost each member $52.50 a year, based on a $26.8m saving over four years. These new arrangements for PSSap members will bring PSSap members into line with members of private sector funds. Labor will not oppose this measure.

The two measures in this bill deal with the Public Service and superannuation, and so it is timely to examine the Abbot government's record. The Abbott government has shown its contempt for the Public Service by offering employees from several departments an unreasonable cut to their hard-won conditions on top of a pay cut in real terms. Under the Abbott government's public sector workplace bargaining policy, every government department and agency has been left with nowhere to turn but to cut costs through cutting real wages and working conditions. The government cannot expect the Australian Public Service to function effectively when large numbers of staff are being sacked and those left behind are forced to fight for the most basic workplace entitlements. The Abbott government has recklessly gutted the Public Service even faster than planned with 11,000 full-time equivalent public servant positions gone in 2014 alone. Before the election Mr Abbott said that 12,000 jobs would be shed from the Public Service, but only through natural attrition. After the election he announced 16,500 full-time public sector jobs would be cut but they would not be through natural attrition. Most of these jobs are now gone, putting strain on the system and on the workers who remain. The Abbott government is so focused job cutting that it has ignored key drivers of efficiency, productivity and customer service. Labor believes in an affordable, sustainable and productive Public Service; but crudely retrenching staff, cutting jobs and reducing wages and conditions cannot lead to a more effective workforce.

Now I would like to the Abbott government's record on superannuation, which by any measure is poor. Let's look at the pause in the Superannuation Guarantee. The Superannuation Guarantee is currently 9.5 per cent. Under Labor the increase to 12 per cent was to take effect between 1 July 2013 and 1 July 2019. The Liberals announced their first delay as part of the original MRRT repeal bill. This delay postponed any further increase until 1 July 2016 and the full 12 per cent will take effect on or after 1 July 2021. Then, as part of the budget, Mr Hockey announced a second delay of a further 12 months, meaning the full 12 per cent will not be reached until 1 July 2022. Now, as part of a deal with Palmer United, the Liberals have made a third delay, meaning the full 12 percent will not be reached until 1 July 2025. These pauses come in the wake of the Prime Minister's promise before the election, on no less than 14 occasions, that there would be no unexpected, adverse changes to superannuation. That promise seems to have gone the way of so many of the Prime Minister's pre-election promises. In a way we should not be surprised, because this Prime Minister is on record as saying:

Compulsory superannuation is one of the biggest con jobs ever foisted by government on the Australian people.

Also, he has said,

We have always as a Coalition been against compulsory superannuation increases.

To further examine the Abbott government's record on fairness in superannuation, let's look at the low-income superannuation contribution. As part of the MRRT repeal, the Liberals will repeal the low-income superannuation contribution from 1 July 2017. The low-income superannuation contribution is a superannuation contribution made on behalf of individuals with an adjusted taxable income of $37,000 or less in an income year. The maximum contribution amount payable is $500. The contribution is designed to broadly return the tax paid on concessional contributions by an individual's superannuation fund.

The Abbott government's cut will take effect from 1 July 2017. Approximately 3.6 million low-income earners will be affected by this cut. Two-thirds of these people will be women. The repeal will negatively impact on the retirement savings of almost one in two women. Taken together with the pause in the superannuation guarantee, the industry estimates that the combined negative impact on national savings by 2025 will be $150 billion.

At budget estimates, it was revealed the government did not request that Treasury model the impact of repealing the LISC on superannuation savings for Australians. The LISC is a measure that has been described by Industry Super Australia as the single most important policy setting in the super system which helps to address inequity in savings gaps whereby women are currently retiring with about 40 per cent less than men. Yet again, the Abbott government has decided to scrap it.

I would like to conclude where I started by reiterating that Labor does not oppose reducing duplication and finding efficiencies within the Public Service. However, we are concerned that ComSuper staff who move to the CSC are being transferred away from the APS and will lose their ability to apply for jobs in and transfer at level to an APS agency. We are concerned that they not be disadvantaged compared to APS employees. In a city like Canberra this is an important factor because, in Canberra, where the ComSuper staff are based, the majority of available jobs they may wish to apply for will be within the APS. It is Labor's belief that if the Commonwealth government is determined to compulsorily transfer ComSuper employees to CSC they should ensure all rights and entitlements are protected. The amendments Labor has circulated will protect these employees, who face an uncertain future, and will not affect the operations of the CSC.

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