Karen McNamara (Dobell, Liberal Party) Share this | Hansard source

I rise to support the Australian Defence Force Superannuation Bill 2015 and cognate bills. I have spoken previously in this place about the contribution, the commitment and the dedication of our ADF personnel. I once again take this opportunity to thank them for their contribution to this nation. I also join with the member for Leichhardt in recognising the hard work of the deployed personnel in the Middle East. I had the pleasure of joining them in April this year and saw the conditions in which they operate and live, especially at the air base at Al Dhafra in the UAE, where the temperature was up to 50 degrees. I raise my hat to these young men and women for their contribution. I also want to acknowledge the ADF personnel who are participating in the ADF parliamentary program this week. It has been an honour to host Squadron Leader Chris Lowe, who is here with me today.

The Australian government is resolutely committed to supporting ADF members throughout their service and in their retirement. As part of this commitment, landmark legislation was introduced on 25 June 2015 to 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, accompanying legislation was also introduced to establish ADF Cover—which is a new scheme that will continue to provide members of the ADF with death and invalidity cover. As part of this legislation, we have also introduced groundbreaking legislation to enable ADF members to participate in part-time work subject to Defence capability requirements. ADF Super seeks to correct one of the longest-running grievances of the veteran and ex-service community—namely, the lack of flexibility and portability of member's superannuation benefits.

As part of the consultative process, the government has worked with stakeholders—including the RSL, the Defence Force Welfare Association and the Australian Defence Association—in the development of this legislation and subsequent policies. As I understand it, all major stakeholders support these important reforms, as do the opposition, and I congratulate those speakers opposite for their support. The Abbott government is steadfast in its commitment 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.

The Australian Defence Force Superannuation Bill 2015 was introduced on 25 June 2015. This bill introduces new, modern and flexible superannuation arrangements for people joining the ADF on or after 1 July 2016. The new military superannuation scheme will be a fully funded-accumulation scheme, and will be known as ADF Super. The current Military Superannuation and Benefits Scheme will be closed to new members as of 1 July 2016. Importantly, current serving and contributing MSBS members will not be compelled to move to ADF Super, although the option is there if they 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 by 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. It should also be noted that this rate is higher than that offered to Australian public servants, who currently receive 15.4 per cent, and significantly higher than the 9.5 per cent available to the majority of Australians through the superannuation guarantee. Further to this, there will be no requirement for ADF Super members to make employee contributions to their superannuation. As a result, serving and contributing MSBS members, who currently contribute a minimum five per cent of their salary, who then choose to become ADF Super members will immediately receive five per cent increase to their take-home pay. ADF Super will apply to those joining the ADF for the first time on or after 1 July 2016. It will also apply to MSBS and Defence Force Retirement and Death Benefits, DFRDB, scheme members who receive retirement pay and then later rejoin the ADF on a full-time basis or as a reservist on continuous full-time service on or after 1 July 2016. Importantly, current serving contributing MSBS members will not be compelled to move to ADF Super. Current serving and contributing DFRDB members are unable to transfer to ADF Super.

Those DFRDB members receiving retirement pay who re-enter the ADF full time or as a reservist on continuous full-time service must make an election to become an MSBS member, to not become an MSBS member or to once again become a DFRDB contributing member before commencing further service. Likewise, those members currently receiving an MSBS pension who re-enter for a further period of service will also be able to join a superannuation fund of their own choice—again noting that they cannot rejoin the closed MSBS. They will also continue to receive their pension during that period of service while accumulating further superannuation benefits.

As I previously mentioned, in further 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. A single employer contribution rate simplifies administrative arrangements, including for ADF Super members. ADF Super is being established to provide members of the ADF with a modern and flexible accumulation superannuation scheme. ADF Super will, for the first time, allow ADF members to join the superannuation fund of their choice.

It should also be noted 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. The introduction of ADF Super has numerous benefits. Australian Government Actuary modelling confirms that ADF personnel who serve less than 15 years will especially benefit under the new superannuation arrangements. Approximately 80 per cent of ADF personnel leave the service after serving less than 15 years.

Importantly, 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. The specific details regarding fees and charges will be worked out as part of the implementation plan for ADF Super and will be made available before the new scheme commences.

What is important is that ADF Super will, for the first time, allow ADF members to join the superannuation fund of their choice. Individual circumstances and preferences will determine which superannuation fund will provide the best value for the individual ADF member. ADF members will be encouraged to seek their own independent financial advice. Additionally, both the ADF Financial Services Consumer Centre and the Commonwealth Superannuation Corporation can provide lists of recommended financial advisers to ADF members. The recommended advisers are so named because of their understanding of and expertise in military financial matters. Defence is also developing tools that will explain the DFRDB, MSBS, ADF Super and ADF Cover to financial advisers to better equip them to provide relevant financial advice.

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 that all ADF personnel who are members of ADF Super have full death and invalidity cover. The ADF Cover provides the same level of death and invalidity cover as is provided to members of the current MSBS.

Additionally, 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 medical conditions that occur while serving in the ADF. If an ADF member dies in service or an invalid dies while receiving an invalidity pension, benefits will be paid to the dependents of that member or invalid or to their estate.

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 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 .

The Abbott 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. It is an honour to commend this bill to the House.

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