Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

I thank colleagues for taking on this debate with regard to military superannuation and the many concerns in the community in relation to equity and justice within the military superannuation scheme. There is a large and frustrated community of ex-service men and women who feel that the standard of living entitlements are not keeping pace with existing fundamentals within the military superannuation scheme. This motion was, effectively, put through this very chamber nearly three years ago by me and was passed with the full support of the House. Yet we still see frustration, concern and a very active campaign, particularly online, of the ex-service community, who want to see more access to equity and justice.

I accept that there are some realities that government does need to deal with in considering any changes. They relate to cost and, if Parliamentary Library figures are to be believed, there are some substantial costs in relation to any changes in this area. There are issues in relation to impacts on the cash balance and the fiscal balance. There are issues in relation to clawback within the scheme, acknowledging that any increases do potentially have an impact on other arrangements such as those to do with age pension payments. That does need to be sensitively considered through any changes in this regard. Also, there has been ongoing debate since the early 1970s in relation to establishing the appropriate link between indexation with regard to the military superannuation pension and the issue of purchasing power to guard against erosion by inflation. Report after report has been unable to resolve this issue of a link.

The use of CPI methodology is based on recommendations of Professor AH Pollard in 1973. It has been challenged in reports such as the Jess review of 1970. There were Senate select committee reports in 2001 and 2002 and in 2008 there was a Senate standing committee report. ABS is still grappling with it, the Podger review grappled with it, all the way through to the Matthews report in 2008, and remained unable to resolve this issue of how to adequately link military superannuation schemes with those issues around purchasing power and the CPI.

I accept the difficulty in dealing with this issue. However, there are many in the community who are aggrieved and their concerns deserve to be heard in this House. There are many who are frustrated that government, report after report, seems to get the concerns about a lack of purchasing power within the current military superannuation scheme, yet, when it comes to actually doing something about it, the arguments of cost and difficulty in making those changes seem to be directed towards those who have done military service. So there is, I think, some justification in the argument that 'why is it only those who have done military service who get the book of government thrown at them when it comes to all being too hard?' Why not engage the military superannuation and ex-service community in trying to work through the many challenges in trying to answer the at least half-dozen reports that have been done in this area since the 1970s and come up with the right and appropriate scheme that can deliver equity and justice for those who have served this country so well and so often? I ask the government to consider this again and I hope this motion has the full support of the House.

Stuart Robert (Fadden, Liberal Party, Shadow Minister for Defence Science, Technology and Personnel) Share this | Link to this | Hansard source

This is the third motion on the indexing of DFRDB pensions to be moved in the last four years. The first was moved by the member for Lyne, the second was moved by me and now the member for Lyne has moved a third motion. I suggest this one will also be agreed to by all members. Yet still nothing has been done.

I support the member for Lyne in his comments. I introduced a private member's bill, through Senator Ronaldson, in the Senate to achieve the very issue we are talking about now. Even though the government agreed twice previously—in the member for Lyne's motion and my motion, which were exactly the same thing, to index DFRDB by the same mechanism as the age pension—on the voices in the last two motions, when a private member's bill went up to achieve the outcome, the government voted against it.

The government has form on this. In 2007 they went to the election promising to fix military superannuation, and they did not. They failed. They failed the veterans of Australia. In 2010, Tony Abbott went to the election with a policy to index DFRDB. On the back of that announcement at the 2010 election, we took a private member's bill into the Senate—because when we announce something at an election as something we are going to do, we follow through with it. But again the government voted against it, as did the Greens.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

What did you do in 11 years in government? Eleven years of inaction!

Stuart Robert (Fadden, Liberal Party, Shadow Minister for Defence Science, Technology and Personnel) Share this | Link to this | Hansard source

Madam Deputy Speaker, you should know better than to speak out of turn. Yet even in the Greens policy it says quite clearly:

Australian Greens leader Bob Brown wrote to Minister Tanner earlier this year to urge him to re-consider the government's response to the Matthews' review and revise the indexation for Defence Force superannuation pensions. We strongly believe that the Government should now act to provide wage-based indexation on the same terms as the Aged Pension …

That is straight from the Greens policy, and yet when we put forward a private member's bill in the Senate, the Greens voted it down. They voted against their own policy. That is how disingenuous the coalition partner of the Labor Party, the Greens, are. Bob Brown said, 'We can't afford it.' The government said it will cost $175 million; we need savings. As part of the private member's bill that was taken up in 2011 to index DFRDB pensions, $300 million worth of savings were found over the forward estimates by reducing the increase in the public service from 12.4 per cent to a miserly 8.4 per cent—a fairly strong increase nonetheless—but there was a four per cent decrease in the growth of the public service within the Department of Defence. That was yielding about $300 million worth of savings—twice the amount of savings needed to pay for the coalition's DFRDB policy. And still the Greens—and, indeed, Senator Xenophon—voted against it. The government said the savings were not real and then three or four months later the Minister for Defence stood up and said, 'I'm here to announce $300 million worth of savings by tapering off the increase in the public service, taking out a piece of work, almost 100 per cent. The level of disingenuousness of this government is completely and utterly staggering.

We believe in the unique nature of service. If I look at the Alliance of Defence Service Organisations in the inquiry of the Senate Finance and Public Administration Legislation Committee on the coalition's bill, the Alliance of Defence Service Organisations stated:

In no other calling, occupation or profession has the State the power to accept or demand the surrender of these rights. The Unique Nature of Military Service deserves unique solutions and also places a great burden on the Government as the "employer” to ensure that ADF members are looked after both during and after Service.

The RSL further said as a submission to the Senate inquiry:

An examination of legislation for the Australian Defence Force shows that in almost all respects, the Parliament has been consistent since Federation in regarding the nation's armed forces as a separate and quite distinctly different part of Australian society.

We agree with them that the military is required to do a range of actions on behalf of the nation and that that service is unique. We believe in the unique nature of military service. We accept the concept of the unique nature of military service. We have seen it in action. We have experienced it. We have committed to it, which is why we once again commit upon government that we will fairly index the DFRDB.

Alan Griffin (Bruce, Australian Labor Party) Share this | Link to this | Hansard source

This has been a vexed issue for this parliament with respect to Defence and veterans' policy over a number of years so I think that it is important in that context that we explain a little bit of that history. It is an issue which governments have grappled with not just over the last four or five years but quite a while before then, and I draw this particular point in those circumstances.

Those who come here today, as the member for Fadden has done, and state that without doubt, unequivocally, the coalition will act upon the commitment they have now made, needs to remember that for 11 years they did not do it. It was not an issue that was raised only in the last four to five years; it was an issue raised regularly over the previous decade. Throughout the previous decade the coalition government, of which for most of that period the now opposition leader was a member of cabinet, said no. I have even seen recent comments which have suggested that the former foreign minister, Alexander Downer, has suddenly had a conversion on the road to Damascus and now thinks that this is an issue that needs to be acted upon.

I have got to give marks though to the former finance minister, former Senator Nick Minchin, who at least has had the courage of his convictions to be consistent with respect to this issue when recently he wrote in a letter that was printed which said:

It is easy to feel sympathy for the demands made by retired defence personnel for improved superannuation ...

However, all claims made upon the public purse, even those by retired defence personnel, should be considered rigorously and on their merits.

This particular claim was properly rejected by the Howard government, of which I was a member, as well as by the Labor government.

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 aged pension.

Defence personnel have their superannuation payments indexed the same way that all other commonwealth public servants on defined-benefit schemes have their payments indexed.

The payments are maintained in real terms, which is what they signed up for. Changing the indexation for defence personnel would create immediate demands for the same change to be made for all other former commonwealth employees, at a potentially enormous cost to taxpayers.

The government should continue to reject this demand.

That is the position of Nick Minchin, former senator, former finance minister, long-time member of the cabinet of the previous government, long-time cabinet colleague of the now opposition leader who has done an amazing backflip compared to his past. Others—and there may be some here—would remember not only that, but that when he was minister for employment and workplace relations, his department actually put forward a submission in respect of considering related issues around the question of compensation in which he argued that defence personnel and people in that area should be treated no differently from other Commonwealth employees. So we have seen a change, and I think that is something that really needs to be remembered by the defence community.

Is military service unique—yes, it is. What do you then do to recognise that uniqueness? A range of things can be done, and a range of things have been done. For example, there is the capacity to access superannuation at an earlier stage under the scheme we are talking about than is the case overwhelmingly for people in the public sector. The fact is that there are various compensatory payments made through the Department of Veterans' Affairs for the impacts of military service. It is recognised.

I would like to address one point that was made in passing, which was the claim that I as a shadow minister prior to the 2007 election went around the country spruiking the fact that we would make changes with respect to this policy. That is incorrect. I must admit that I did when asked on rare occasions make the point that we were committed to a review of superannuation indexation arrangements. That review occurred and was acted on. A set of decisions were made that are well known to the Defence community, decisions that they were not happy with. But the fact that there was a commitment to a review does not commit us to change. I certainly made that point on a number of occasions prior to the 2007 election. I understand the concerns that have been raised by the veteran community. I support their right to pursue those concerns. I wish them well. But we need to try to remove some of the hypocrisy from the arguments that have been put by those opposite about this serious issue.

Jane Prentice (Ryan, Liberal Party) Share this | Link to this | Hansard source

I rise today to speak on this motion because Australia's veterans and their families deserve a fair go. This motion addresses many serious issues for the Ryan electorate and I thank the member for Lyne for putting this motion today. My office has received literally hundreds of emails and telephone calls regarding fair indexation and the government's failure to appropriately deal with this issue. Fair indexation is one of the most important issues affecting the veteran and ex-service community. I spoke in my maiden speech about Gallipoli Barracks at Enoggera, which is in the Ryan electorate, and I acknowledged the very valued contribution made by their service men and women. In that speech, I recommitted again to fair indexation of the Defence Force Retirement Benefits Scheme, the DFRBS, and the Defence Force Retirement and Death Benefits Scheme, DFRDBS. It is something that I will continue to fight for.

The coalition believes in the unique nature of military service and believes that current indexation, which utilises the CPI alone, does not adequately reflect changes in the cost of living of ex-service men and women, Australians who have given much to their nation. Fortunately, I am pleased to reconfirm that the coalition has a positive plan to address this problem. This is not a new issue. The Leader of the Opposition announced prior to the 2010 federal election that military superannuation pensions would be fairly indexed. The coalition acted on 18 November 2010 when we introduced into the Senate the Defence Force Retirement and Death Benefits Amendment (Fair Indexation) Bill 2010. But it was a shameful day for the Australian Senate and for Australia when Labor and the Greens combined to vote down this bill. That was a clear demonstration that the Prime Minister, the Australian Labor Party and the Greens are not committed to improving the lives of military superannuants and their families.

On 14 March this year, I recommitted to the reform of military superannuation pensions when I signed the coalition's pledge to continue our commitment to Australia's veterans. This pledge has also been signed by the Leader of the Opposition and the shadow minister for veterans' affairs and many other members of the coalition. That pledge says: 'The coalition will ensure DFRB and DFRDB military superannuation pensions are indexed in the same way as age and service pensions. All DFRB and DFRDB superannuants aged 55 and over will benefit.' The cost of this will be about $3 billion to $4 billion over four years. If we had a government that was capable and responsible, a government that knew how to manage the economy for all Australians, then finding this funding for military superannuants would not be difficult. In fact, it would be paramount. This government is splashing $56 billion plus on the NBN without even referring it to the Productivity Commission but says that it cannot afford to fund this change, which is critical for equity and justice.

The government demonstrated their lack of commitment in this year's budget by announcing that they wish to seek to maintain a yet-to-be-delivered surplus by deferring spending of $33.7 million on compensation arrangements for veterans and giving higher priority to cost blow-outs in immigration detention centres and carbon tax advertisements. This is a slap in the face to veterans. Veterans with whom I have spoken have said how offended they are about these delays. It is simply not appropriate to delay changes recommended in the Campbell review for two years until July 2014 while at the same time wasting taxpayers' money on carbon tax advertisements. This government clearly has its priorities wrong when it comes to doing the right thing for veterans. It is absolutely crucial that the government commit to fully support fair and just military superannuation pensions. It is clear, however, that the only way to deliver this very important reform is to change the government. Should the coalition be elected into government by the Australian people, we will look after all military superannuants and their families because that is the right and just thing to do.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

I rise to speak to the motion moved by the member for Lyne. Thank you very much for bringing this important issue to the attention of the House. Having had the benefit of being in the parliament for 14 years, unlike the two previous speakers, I know that this is a new issue; it is not something that has just sprung from a well that someone has decided to do something about. Indeed, one of the big problems with this is that for 11 years under the Howard government nothing was done. Promise after promise was made and review after review was held. The Podger review came out. It was not even released. No-one talked about it. This festering sore of an issue has been allowed to gather steam.

The difficulty is that nobody has said no. One thing in life that you do not want to hear is 'No'. Nobody has mounted the case as to why this should not happen. They have promised reviews. Indeed, Labor was at fault in this as well—we promised and had a review, the Matthews review. The Matthews review said that there should be no change. We have built up a level of expectation among our service men and women, and that is unfair. Our service men and women deserve better than that. They deserve an answer one way or another and not this continual playing of politics with their lives. It has been an ongoing debate, with several reviews. For the last speaker to make statements about what the next coalition government will do is cant hypocrisy, because they never did it in the past.

Indeed, changing indexation methodology may be inappropriate, inequitable for other Commonwealth superannuants and indeed very costly. Where will the money be found? The men and women of our Defence Forces do an amazing job. We should not be playing around with their service. We should recognise it and not use it as a political football. They need to understand that the benefits that they receive are above and beyond those of other people—as they should be, because what they do for their country is above and beyond that of other people. They receive currently higher employer contribution rates of 18 per cent to 20 per cent depending on service time, compared with the nationally legislated rate of nine per cent, which is going to become 12 per cent. There are sovereign guarantees within the fund so that their rates do not go up and down with fluctuations in the market. They can receive lump sum payments. They can access, as they should, their superannuation immediately upon service retirement. They do not have to wait until reaching preservation age as others do.

Understandably, this is a matter that many people feel passionately about. I have had many discussions with my service veteran communities. We need to see the best outcome for those in retirement. It needs to be clarified that superannuation retirement pay is not the same as the age pension. Superannuation is an employment based benefit whereas the age pension is a means tested income support payment that is part of our social security system. I say to many in my electorate: 'You never want to be on a pension. Work hard and never end up on a pension.' We should not be comparing these two benefits. They are not the same. These payments serve different purposes and are provided for different reasons. It is not relevant to compare indexation, as indeed Nick Minchin has stated quite eloquently, with the member for Bruce reading that into the Hansard. It is not relevant to compare them. For many people, the age pension is their only source of income. For many Defence personnel, their Defence Force super is not their only source of income.

However, there are individuals who are receiving less than or the equivalent of the age pension on their Defence Force super. Indeed, many in my electorate who have Commonwealth superannuation are receiving less than or the equivalent of the age pension. We need to deal with that issue. But that is a separate issue. Let us deal with that lingering sore but not by taking up a sledgehammer—which many want to do—to change indexation. Let us deal with those people who are caught in a bind and not put a huge impost upon the budget by going a different route—a route the coalition never chose when they were in government. We need to be seeking the right and just income for our service men and women because they have done so much for us.

In his 2008 Review of Pension Indexation Arrangements in Australian Government Civilian and Military Superannuation Schemesa review the ALP said it would do upon coming to government—Mr Matthews said:

… it would need to be generally accepted that an employer retains a responsibility to compensate former employees for improvements in productivity, as reflected in salary rises, which occur after an employee leaves them. This is not a generally accepted responsibility in Australia.

The view from Matthews was that you cannot keep compensating people. The difficulty with the compensation issue is that it will reward those on the highest income and will actually not fix those who are left behind at the bottom. (Time expired)

Michael McCormack (Riverina, National Party) Share this | Link to this | Hansard source

This Labor government has not done the right and proper thing by veterans as far as their superannuation entitlements are concerned. I acknowledge what the member for Chisholm has just said. If that is so, let us work together as a parliament for those people she rightly praised in her speech. For people who have bravely and willingly laid their lives on the line for their country, the present indexation levels are unacceptable and need to be rectified. The government's continued refusal to pay adequate and fair compensation to ex-service personnel raises many questions. Why does the government continue to discriminate against military superannuants by not indexing their superannuation to retain purchasing power, as promised by their employer when they joined their respective service? Why do the minister and his department continue to neglect the nation's obligation to honour enlistment conditions—contract vested property—and engage instead in continuous extraneous rhetoric, spin and political posturing? Serving and retired members of the Australian Defence Force should not be treated as second-class citizens.

This is a big issue for the Riverina and for Wagga Wagga, a triservice city, because many defence people retire to the region because of the quality of the regional lifestyle. If fair indexation is affordable for some 3½ million age pensioners and other welfare beneficiaries, and if generous indexation is affordable for certain parliamentary and judicial superannuation pensioners, why is fair indexation not affordable for military superannuation pensioners?

Australian Defence Force people deserve substance, not a so-called fact sheet, the contents of which can be disputed all the way through. Our veterans served their country selflessly and at great personal risk, as we all know too well. In retirement, they, their widows and their families deserve to have their employment conditions honoured as faithfully as they provided their gallant service. As a condition of employment, fair indexation must be a nondiscretionary obligation in the budget. Surely in a country such as ours, where a fair go is one of the cornerstones of our culture, just things such as this are always affordable. When will the government take real action to fix this? Why does the government permit a military condition of service to continue to be breached? The Minister for Veterans' Affairs, who claims to be well aware of the concerns of the veteran community, would surely understand this. This condition of service provides for retirement pay, a superannuation pension which maintains its purchasing power. Service people themselves compulsorily contribute to it. The nation is duty bound to honour that employment condition; ipso facto, the budget should provide—veterans argue—for fair indexation as a nondiscretionary item before other discretionary items.

Fair indexation of military superannuation pensions is not a new or improved benefit but a condition of employment. It has been and remains a condition of military service that superannuation pensions maintain their purchasing power. That is why the parliament made provision for that to be done when the schemes were established. This was an employment condition, if you like, or contract which established vested property at the time of enlistment. The cost to provide for fair indexation to meet that condition of service is estimated by the coalition at $100 million over four years before clawbacks—a figure supported by renowned economic commentator Peter Thornton. Of course, any cost to the taxpayer is moot given that proper indexation was a condition of employment and is thus, or should be—according to those who stand to lose out if this issue is not addressed—a nondiscretionary obligation on the public purse. The government's continuing refusal to address this issue cannot be reconciled with Labor's current platform which says it will 'continue to explore equitable and affordable mechanisms for the improvement' of military pensions.

Failure to justly index military superannuation pensions comes at a significant cost to veterans' purchasing power. That cost for an average superannuant on $23,000 per annum who has been retired for 15 years is the loss of some $280 per fortnight in real purchasing power which they would have had if their super had been justly indexed at the same rate as age pensioners. With the cost of living increasing all the time and the carbon tax—certain to place even greater pressures on those relying on a pension to make ends meet—real purchasing power becomes an even more burdensome, everyday issue. Fair indexation of military superannuation pensions to maintain their purchasing power is a founding principle of the Defence Force Retirement and Death Benefits, and Military Superannuation and Benefits acts. This purchasing power is a condition of service and veterans plan their lives in retirement on that basis.

Australia has a magnificent record of service in war and peacekeeping operations since Federation, with nearly 1½ million serving. The sacrifice made by their families has also been enormous. It is now time to honour that service with fair indexation. I support this motion and I call on the government to do the right thing by our retired military personnel. This is about equity and justice for those frustrated veterans who are out of pocket and because they have been let down, unfairly, by this Labor government.

Debate adjourned.