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

All you have said is you do not support the leave travel entitlement. That is all you have said. That leaves another $5.4 billion, and you still have to find the $15 million to pay for it. There is an obligation on the opposition: come clean with the Australian community. Here is the opposition's opportunity to say to us whether or not it supports the government's direction on these savings in the defence budget of $5.4 billion. It is simple: yes or no. And if it does not support them then it should tell us where it is going to get the money from—simple. Not too hard. Very simple. Just do it.

In terms of the military superannuation, let me say to you that the opposition, as we have just heard, have said—and there may be something which they do not quite understand here—that they would index DFRB and DFRDB superannuation payments in the same way as the age pension. Keep that in your mind, Mr Deputy Speaker. The opposition want to equate a superannuation benefit payment for work with an income support. They are trying to equate superannuation—a benefit paid to an employee as a result of their working life—with an income support measure such as the age pension.

Let me go through some detail. Over the 11 years of the previous Howard government, what did they do on the question of the indexation of military superannuation? It is a simple question, and the answer is zero, nought, nothing. They put in place the Podger review to review superannuation. From memory the Podger review gave its report to the then government in March or April of 2007. The government did not release it; they just refused to release the report. They thought, 'Just do the report, give people an idea that we are actually going to try to do something but, in fact, do nothing.'

What we did was proceed to release the review and then go on and do more work, and we have come to the conclusion that it is not appropriate for us to index DFRB and DFRDB superannuation payments and treat them the same as the age pension. We know it is very costly. What is more, the opposition know they cannot afford it. Despite statements by the Leader of the Opposition, by the shadow minister for veterans affairs and by this shadow minister they know it cannot be afforded. Their former finance minister Nick Minchin said very recently that this claim to change indexation was:

… properly rejected by the Howard government, of which I was a member …

  …   …   …

There is no inherent logic to the proposition that a public sector employment-related superannuation payment should be indexed in exactly the same fashion as a means-tested welfare benefit in this case, the age pension.

That was the Howard government's position. So what is the difference? All of a sudden we hear these guys telling us that it is appropriate to equate an employment related superannuation payment to the age pension.

Let me just explain what that might mean. (Extension of time granted) I want to give a few case examples so we can compare what it means to be on a military superannuation through DFRDB. A warrant officer who retired in 2010 after 35 years service is estimated to receive a payment without commutation of approximately $54,000 per year. If he or she decided to commute five times the annual payment—and 99.5 per cent of members have commuted the annual payment—then the lump sum would be around $270,000, in exchange for a reduced annual payment of some $40,000 per year. What we are being asked to do here is equate that superannuation payment to the age pension. Are you serious?

A colonel equivalent who retired in 2010 after 35 years service is estimated to receive a payment without commutation of approximately $78,000 per year. If he or she decided to commute five times the annual payment, then the lump sum would be around $390,000 in exchange for a reduced annual payment of some $59,000 per year. Again, are you serious? Are you seriously expecting us, this government, the community, to equate a superannuation payment of $59,000 per year, indexed to CPI, with the age pension? You might tell me what the logic is here. What is the logic of equating a superannuation payment of $59,000 per year to the age pension?

You know, as I know, that those people whose income falls below the threshold can get access, if they meet the appropriate service requirements, to the service pension at age 60 and to the age pension at age 65. Should any of these people, over time, find that their incomes have dropped or that they have made decisions around their lives which mean that their incomes have dropped, then they will get access to the age pension or the service pension, depending on their individual circumstances. I was not aware of this until recently but, in addition, since 1988, DFRDB members have been entitled to a nine per cent productivity benefit, which is available as a lump sum on retirement. So not only can they do the commutation but they also get a nine per cent lump sum productivity benefit on retirement.

The proposition we have before us from the opposition, being trounced around the country at every RSL conference I go to—

An honourable member interjecting—

It is very serious, and I tell the RSL people that we will not be doing it. I am upfront with them.

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