Ewen Jones (Herbert, Liberal Party) Share this | Hansard source

I rise to speak on the Australian Defence Force Superannuation Bill 2015, the Australian Defence Force Cover Bill 2015 and the Defence Legislation Amendment (Superannuation and ADF Cover) Bill 2015. I want to go through the dry parts of the bills because my Defence community in Townsville are very keen on this legislation. I will make sure I get across exactly what we are trying to do here and then I will make some general comments about Defence in my city.

This legislation introduces new, modern, flexible superannuation arrangements for members in the ADF on or after 1 July 2016, known as ADF Super. For the first time ADF members will be able to choose their superannuation fund. This legislation will also make rules for the administration of the ADF super fund. ADF members know that in their work it can be difficult to obtain death and disability cover. We are also introducing legislation to establish ADF Cover, a new scheme that will provide members of the ADF with death and invalidity cover, which is so important for members of their family. Legislation will also enable ADF members to seek part-time work, subject to Defence capability requirements.

Until now ADF members have had no flexibility with their superannuation benefits. People struggling with their military superannuation, especially those who have already separated, continually come into my office. The current Military Superannuation and Benefits Scheme, or MSBS, will be closed to new members of the ADF from 1 July 2016. Although existing ADF members will not be forced to move from MSBS to ADF Super, they can choose to do so.

The government has consulted with the wider Defence community on this legislation, the Defence Force Welfare Association, the RSL and the Australian Defence Association. There is cross-party support in this chamber for this legislation. This legislation fixes one of the biggest and longest-running grievances of the veteran and ex-service community. This legislation will introduce new measures to allow the Minister for Defence to create a trust deed by 1 July 2016. This deed will establish the ADF Super scheme and vest the fund in the Commonwealth Superannuation Corporation, or the CSC—the one thing Defence loves is acronyms; they just love acronyms. If you had a whole conversation just using letters, people wearing a uniform or who have worn a uniform would be able to follow it no problems at all.

ADF Super members will receive a contribution rate of 16.4 per cent, regardless of which superannuation fund they choose. This rate is higher than for the APS at 15.4 per cent and the general population at 9.5 per cent. I want to talk about that later because there are specific reasons. We must understand the nature of service. ADF Super will apply to those ADF members who join the Defence forces from 1 July 2016. Current ADF members who are on MSBS and switch to ADF Super will receive a five per cent increase to their take-home pay as members will no longer be required to make the compulsory five per cent contributions. I do not think that will be lost on my city either. This will apply to former serving MSBS members who rejoin the services and choose to join ADF Super and to MSBS and DFRDB members who receive retirement pay and rejoin the ADF on a full-time basis or as a reservist on or after 1 July 2016. The current MSBS will be closed to new members from 1 July next year. Currently contributing DFRDB members are unable to transfer to ADF Super.

The Australian Defence Force Cover Bill 2015 establishes the new statutory death and invalidity scheme to be known as ADF Cover. All ADF members who join ADF Super will be covered by ADF Cover regardless of their superannuation fund. ADF Cover will provide benefits for those who are medically discharged and have only limited employment as a civilian as a result of service. If a member's capacity is reduced by 60 per cent, they will be classified as class A and receive an appropriate pension. If an ADF member's capacity is reduced by 30 per cent or more but less than 60 per cent then they will be classified as class B and will receive the appropriate pension. If the member's capacity is under 30 per cent, they will be classified as class C and superannuation will be preserved in the fund they choose.

If an ADF member dies in service, or if an invalid dies while receiving an invalidity pension, benefits will be paid to the dependants of that member or invalid or to their estate. The lump sum to the surviving spouse is 25 times the prospective service to age 60 multiplied by the member's salary on the date of death. That will be attractive to some Defence wives I know who have spoken about their capacity to claim on this as well—I mean that as a joke.

The spouse can convert the lump sum to a pension. The pension is 1.5 per cent of prospective service to age 60 multiplied by the member's salary on the day of death. The pension is increased if they have eligible children. If there is no spouse but there are dependent children, the lump sum—calculated as 25 times prospective service to age 60 multiplied by the member's salary on the date of death—is paid to the guardian or legal personal representative for the benefit of the children.

So those are the nuts and bolts of what we are trying to achieve here. I really should address the flexibility of service. This legislation provides for more flexible service for permanent ADF members. For the first time ADF members can seek part-time work. This will be subject to capability requirements of the force. It is believed those changes will improve the ADF workforce model, will provide additional flexibility for members and will lead to improved recruitment and retention in the force.

When people come to me to talk about military personnel, there are the normal gripes about DFRDB and DFRB that we have worked on. We have changed the allocations for those sorts of things in that space. Most guys who are younger than me—sub-50; around your age, Deputy Speaker Mitchell—

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