Michael McCormack (Riverina, National Party, Parliamentary Secretary to the Minister for Finance) Share this | Hansard source

The Australian Defence Force Superannuation Bill 2015 is important legislation. It is timely legislation. It was introduced on 25 June 2015 and provides new, modern and flexible superannuation arrangements for people joining the Australian Defence Force on or after 1 July 2016.

This new military superannuation scheme will be a fully funded accumulation scheme. The current Military Superannuation and Benefits Scheme, MSBS, will be closed to new members from 1 July 2016. Importantly, serving contributing MSBS members will not be compelled to move to ADF Super although they may choose to do so. For the first time, ADF members will be able to join the superannuation fund of their choice. A default military superannuation scheme will also be established, as is required under law.

Our Royal Australian Navy, Australian Army and Royal Australian Air Force men and women have a unique and remarkable role, both at home and abroad. That is recognised by everyone who sits in this place. In recognition of this unique role, ADF Super members will receive a generous employer contribution rate of 16.4 per cent, regardless of the superannuation fund they choose. I say 'generous' but it is also wholly appropriate. This rate is higher than that offered to Australian public servants, which is 15.4 per cent, and significantly higher than the 9.5 per cent available to the majority of Australians through the Superannuation Guarantee. I know we all recognise that ADF members have a unique and special role. They place their lives on the line—many of them, each and every day, when they go out to do their duty. In fact, all of them at some stage or another do just that.

There will be no requirement for ADF Super members to make employee contributions to their superannuation. As a result, serving contributing MSBS members, who currently contribute a minimum five per cent of their salary, who choose to become ADF Super members will immediately receive a five per cent increase to their take-home pay. ADF Super fixes one of the long-running grievances of the veteran and ex-service community—namely, the lack of flexibility and portability of a member's superannuation benefit.

Accompanying legislation was also introduced to establish ADF Cover, the Australian Defence Force Cover Bill 2015. ADF Cover is a new scheme that will continue to provide members of the ADF with death-and-invalidity cover. The government recognises that the nature of military service makes it extremely difficult for ADF members to obtain death-and-invalidity cover at a reasonable cost. ADF Cover addresses this issue by ensuring that all ADF personnel who are members of ADF Super have full death-and-invalidity cover.

ADF Cover provides the same level of death-and-invalidity cover as is provided to members of the current MSBS. ADF Cover will apply regardless of the superannuation fund chosen by the ADF member. ADF members will not be required to make any contributions to ADF Cover and all benefits paid under ADF Cover will be met from consolidated revenue. ADF Cover will provide benefits for ADF members who are medically discharged and whose capacity to undertake civilian employment is limited as a result of a medical condition that occurs while serving in the ADF. That is important because many who serve—and proudly wear their uniform—find it difficult when they transition back into civilian life, none more so than if they have a medical condition caused by that service on behalf of the nation. It is difficult enough for them to be able to fit back into normal civilian life. To be able to do it with financial security is vitally important.

If an ADF member dies in service or an invalid dies whilst receiving an invalidity pension, benefits will be paid to the dependents of that member or invalid or to their estate. The Defence Legislation Amendment (Superannuation and ADF Cover) Bill 2015 and the Australian Defence Force Cover Bill 2015, for flexible service, is very important legislation in this place. Accompanying the introduction of ADF Super and ADF Cover is legislation which provides for significantly more flexible service for permanent ADF members. The government has introduced groundbreaking reforms that for the first time will enable ADF members to seek part-time work, subject to Defence capability requirements. That is an important distinction: subject to Defence capability requirements. If they are wearing their uniform, we want them to put that first and foremost, as all ADF personnel do, but these are groundbreaking reforms.

These significant reforms will improve the ADF's workforce model and will provide additional flexibility for members of the military. We need to understand that the world is a changing place and that we need to be able to provide flexibility for our Defence people who sacrifice a lot to wear the uniform. Deputy Speaker Mitchell, you and I are well aware of that, having done a number of the Australian Defence Force parliamentary programs together. You and I have seen it firsthand, as I know the member for Moreton has in the various capacities that he has undertaken in his parliamentary career. When you go to the bases and you have an in-depth look at what those people do, their commitment never ceases to amaze. They put extraordinary ability and talent into their work every day, and they have to because their lives and the lives of many others are very much in their hands.

This legislation will also improve the ADF's employment offer, leading to improved recruitment and retention of personnel. That is important too, because retention of personnel is something that Defence needs to ensure. Defence needs to ensure they have good working conditions and good superannuation security in order to make Defence a place that people want to go to take up a career. I was so pleased that I was able to take part in a review of the gap year program that the coalition government introduced and to see so many of those young people who might have done other things for their gap year after year 12 or, indeed, perhaps would not have chosen to participate too much at all. The experiences that they had at Royal Australian Air Force Base Forest Hill at Wagga Wagga and the Army Recruit Training Centre at Kapooka, the home of the soldier, will provide advantages for life for those young people, no matter what they choose to do in their life.

Defence is a modern, flexible and responsive employer. I say the word 'responsive'. I know the great work that the Kapooka commandants do at Wagga Wagga. Theirs is one of the most difficult jobs in the nation. We think that we have an important job to govern the country and, in your case, Deputy Speaker Mitchell, and the member for Moreton's case, to keep the government accountable. The Kapooka commandant has the job of making sure that all the recruits who do not go to Duntroon—they are not officers; they are young recruits, and some are not so young—are the future of the Army. They are the future of the long line of khaki which has served us steadfastly, proudly and staunchly since 25 April 1915, and even a little bit before that. Colonel Stephen Jobson is doing a fantastic job. He follows a long line of wonderful people who have held that job—one of the most, I believe, important in this nation.

I am digressing a little bit from the superannuation legislation before us, but what that commandant has done to ensure that bullying is no longer a part of any military establishment that he runs and certainly the Kapooka Army base and to ensure that respect for women is first and foremost, front and centre, of anything that that base does is to be commended. I know that he is headed for much bigger things in his future military career. He certainly is, because the sorts of things that he has improved upon from previous commandants are to be admired. Whilst I am speaking of that, the member for Bass was formerly a Kapooka commandant. As I say, it is one of the most difficult, most demanding and challenging jobs in the nation, but they have all done a very, very fine job.

Getting back onto this legislation: the government is steadfastly committed to supporting ADF personnel, and these reforms will help bolster Defence's capability. Importantly, these reforms will improve conditions of service for members of the ADF. We want to make it attractive. We must make it attractive for people to want to be able to serve our nation, because, as we all know, there are challenges which lie ahead, and we are going to need the very best and brightest people wearing our military uniforms.

The closure of MSBS and establishment of ADF Super were announced as part of the budget. These changes will reduce the government's unfunded liabilities by about $100 billion by 2050. It is important to note that this is not a savings measure. ADF Super has a forecast total cash cost of $433 million over the forward estimates to 2018-19 and $3.196 billion over the decade. ADF Super will be a new, modern and flexible superannuation arrangement for people joining the ADF on and after 1 July 2016. Members will receive a generous employer contribution rate of 16.4 per cent—but, as I said, it is not so much generous as appropriate. ADF Super fixes the long-running issues of inflexibility and portability of a member's superannuation benefit. That is vitally important.

ADF Cover is a new scheme which will provide members of the ADF with death and invalidity cover, given that they are unlikely to be able to source this cover at a reasonable price, given the very unique and dangerous nature of their work.

Flexible service is a groundbreaking reform which adds flexibility to the ADF's workforce model. Flexible service will allow ADF members, where possible, to serve part time. This new flexibility arrangement will vastly improve the ADF service offer, which will improve recruitment and retention. As the member for Riverina, I want to see more people going through Kapooka. I want to see the government committing to making sure that some of those gap-year young people—they are not students anymore—and those people who want to join the ADF at whatever age are able to have that security of superannuation guaranteed.

The government has worked with stakeholders such as the RSL, the Defence Force Welfare Association and the Australian Defence Association in developing these policies. All major stakeholders support these important reforms, and I am encouraged to hear that the Australian Labor Party will also vote to support these bills. I thank them for that bipartisan commitment. The Abbott government is steadfastly committed to supporting ADF personnel. These reforms will help bolster Defence's capability and, importantly, these reforms will improve conditions of service for members of the Australian Defence Force.

See this speech in context