John Alexander (Bennelong, Liberal Party) Share this | Hansard source

It gives me great pleasure 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. These bills give me the opportunity to highlight the fact that the Abbott government is resolutely committed to supporting Australian Defence Force members throughout the period of their service and also in their retirement. This commitment is evident from this landmark legislation introduced to the House on 25 June 2015, which will establish a new military superannuation scheme for ADF members, to be known as ADF Super. As part of the government's recognition of the unique nature of military service, further legislation was also introduced to establish ADF Cover—a new scheme that will continue to provide members of the ADF with death and invalidity cover. Also introduced was groundbreaking legislation enabling ADF members to seek part-time work, subject to Defence capability requirements.

ADF Super fixes one of the longest-running grievances of the veteran and ex-service community—namely, the lack of flexibility and portability of a member's superannuation benefit. 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. This government is steadfastly committed to supporting ADF personnel and these reforms will help bolster Defence capability. Importantly, these reforms will improve conditions of service for members of the ADF.

Several weeks ago I was very fortunate to accept an invitation to join Battle Group Waratah at the 2nd/17th Royal New South Wales Army Reserve for a personal training session. The Prime Minister also attended. Attending was a mistake—it was a rigorous and tough workout with some exceptionally fit men from a range of age groups. Our Prime Minister was magnificent—I was good for weight and age! Having been in many training groups myself, what struck me was the camaraderie in this group. It was an extraordinary thing to see. It is one thing for an athlete to train to try to win a game, but the fitness level that a Defence member must have means that their life and the life of their team mates may well depend on their ability to lift and run and carry and make decisions, literally, under fire. To see the rapport between our ADF service men and women really made me proud to be Australian. Their professionalism and work ethic left me feeling confident that our nation's defences are in the best possible hands. This is why it is so important for government to do everything we can to support our ADF personnel, as evidenced by the bills being discussed here today.

ADF Super represents a new, modern and flexible superannuation arrangement for people joining the ADF on and after 1 July 2016. This will be a fully-funded accumulation scheme. The current Military Superannuation and Benefits Scheme will be closed to new members from 1 July 2016. Members currently contributing to MSBS will not be required to move to ADF Super, although they will be given the option to do so. This legislation means that 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.

In recognition of the unique nature of military service, ADF Super members will receive a generous employer contribution rate of 16.4 per cent, regardless of the superannuation fund they choose. This rate is higher than that offered to Australian public servants—15.4 per cent—and significantly higher than the 9.5 per cent available to the majority of Australians through the superannuation guarantee. 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 of 5 per cent of their salary and who choose to become ADF Super members will immediately receive a 5 per cent increase in their take-home pay.

ADF Super will apply to those joining the ADF for the first time on and after 1 July 2016, to those contributing MSBS members who choose to join ADF Super, to those preserved MSBS members who rejoin the ADF and choose to become a member of ADF Super, and to those MSBS and Defence Force Retirement and Death Benefits scheme members who receive retirement pay and rejoin the ADF on a full-time basis or as a reservist on continuous full-time service on or after 1 July 2016. Current contributing DFRDB members are unable to transfer to ADF Super. The introduction of ADF Super does not affect the government's delivered election commitment to provide new indexation of DFRB and DFRDB military superannuation pensions.

Underlying this, ADF Super is being established to provide members of the ADF with a modern and flexible accumulation superannuation scheme. This modern workforce has far greater needs for flexible working arrangements, with new mums having varying needs as an example. ADF Super will facilitate a flow of people in and out of Defence and in and out of the super provider of their choice, which is a big change on the previous rigid arrangements and should help to attract a new cohort to serving their nation.

Throughout our extensive consultations the lack of flexibility and portability of a member's superannuation benefit was one of the longest running grievances of the veteran and ex-service community. Australian Government Actuary modelling confirms that ADF personnel who serve less than 15 years will especially benefit under the new superannuation arrangement. Approximately 80 per cent of ADF personnel separate after serving less than 15 years.

The Australian Defence Force Cover Bill 2015 establishes a new statutory death and invalidity scheme to be known as ADF Cover. The government recognises that as a result of the unique nature of military service it is difficult for ADF members to obtain death and invalidity cover at a reasonable cost. ADF Cover addresses this issue by ensuring 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. Accompanying the introduction of ADF Super and ADF Cover is legislation that will provide 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. These significant reforms will improve the ADF's workforce model and will provide additional flexibility for members of the military. It will also improve the ADF's employment offer, leading to improved recruitment and retention of personnel. Defence is a modern, flexible and responsible employer. The introduction of flexible part-time work for full-time ADF members will encourage skilled and experienced people to stay in the ADF longer.

In this centenary year of Anzac, it is fitting that the Abbott government is making these changes to further support ADF personnel. These reforms will help bolster Defence's capability and improve the conditions of service for members of the ADF. I commend these bills to the House.

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