David Feeney (Batman, Australian Labor Party, Shadow Minister for Justice) Share this | Link to this | Hansard source

I am pleased to rise and speak to the ADF Superannuation Bill 2015, the ADF Cover Bill 2015 and the Australian Defence Legislation Amendment (Superannuation and ADF Cover) Bill 2015. This package of bills will create a new superannuation scheme for members of the ADF. The opposition supports these bills and the outcomes they seek to achieve for our future ADF personnel, as well as those ADF members who choose to transfer across from the previous scheme.

In rising to speak today I would primarily like to speak to the provisions in the bills that support the aims of Project Suakin by introducing greater flexibility and portability than was available under the Military Superannuation and Benefits Scheme. Project Suakin was an initiative of the former Labor government. I launched it in August 2011 in my role as Parliamentary Secretary for Defence. It began as a project aimed at enhancing the reserve employment model and the reserve integration with the total force, most particularly in the Australian Army.

However, the scope of the project very quickly grew to encompass the whole of the Defence Force, and indeed the whole of the Defence organisation, including permanent members of the Public Service. The aim of this project was to modernise the ADF workforce environment to reflect the evolving realities and priorities of a more mobile workforce in a way that facilitated member retention, increased female workforce participation and gave Australia the most effective Defence Force and Defence organisation possible. This was a long-term investment in our Defence personnel and our Defence Force capabilities.

In 2011, more than 10,000 ADF members—both permanent members and reservists—provided input into the project through a survey that looked at their priorities and career requirements. In conjunction with other research this survey confirmed that the face of the ADF was changing, as were the workplace requirements. It revealed that our reservists wanted increased opportunities and better career management as well as—insofar as practicable—predictable work patterns. Meanwhile, our permanent members were increasingly looking for greater flexibility and a wider range of service options that more accurately reflected their changing circumstances. It was also clear that for many, service with the ADF was no longer a lifelong career, as periods of service were shorter—often much shorter than the average terms people spend with the public service. There is also greater fluidity, with many members moving in and out of the Defence Force or across service streams more than once during their careers.

So, as Project Suakin rolled out, it aimed to remove the barriers—both legal and administrative—that limited flexibility in the ADF workforce environment and in doing so provide a full spectrum of service options from full-time to part-time for our ADF members. For example, when an ADF member becomes a new parent, or when they take on the responsibility of an aging parent, their circumstances and ability to work will inevitably be affected. In his discussion of Project Suakin in The Strategist, Hugh White gives the example of a young soldier who wants to take a couple of years out of the Army to set up a nest egg and so spends a couple of years working in the mining industry. But we do not want to lose that talent permanently. These personnel, trained by the taxpayer and instilled with the virtues and values of the ADF, should be retained by the Australian Defence Force and should not be lost just because we cannot provide them with the flexibility they need and have indeed come to expect. We also want to encourage greater female workforce participation by facilitating an environment where women can have long and satisfying careers in our Defence forces regardless of whether or not they decide to have a family.

So Labor's Project Suakin set out to transform, over the long term, the workforce environment that these personnel operated in. Despite underhanded efforts on the part of those opposite to try to rebrand Project Suakin as a coalition initiative in 2013, I am glad that this endeavour has continued to be supported on a bipartisan basis. I am particularly pleased to see measures in these bills which complement and facilitate the goals of greater flexibility embodied by Project Suakin. No matter how many times those opposite seek to relaunch this initiative, it will remain supported on a bipartisan basis and a tremendous initiative.

The new superannuation scheme created by these bills moves us away from the rigidity of the Military Superannuation and Benefits Scheme, the previous superannuation scheme which applied to serving members of the ADF and which provided for limited portability. Unlike the MSBS, this new scheme allows members to transfer their superannuation when they move to a new employer. This recognises the point that I raised earlier—that ADF personnel have increasingly been a part of the Defence family for shorter periods, with many pursuing independent civilian careers after providing service to their country. Those personnel who choose to pursue a civilian career can now take their superannuation with them. Likewise, those ADF members who move in and out of the service over the term of their working life will no longer incur the costs of dealing with cumbersome rigidities in their superannuation.

Importantly, these bills also makes changes that will assist permanent members who cannot or do not wish to work full-time. Under the current arrangements, permanent ADF members who wish to work other than full-time must take part-time leave without pay. These bills will remove that requirement. The new scheme also broadens the definition of 'salary' for superannuation purposes and removes the requirement for compulsory employee contributions.

By increasing the flexibility available to ADF members in relation to their superannuation, these bills, and the new scheme itself, support the original aims of Project Suakin. Labor fully support the continuation of the work that we began back in 2011 when we initiated Project Suakin. We therefore support the formation of this new superannuation scheme, particularly its ability to support flexibility and portability.

In this, its final form, the package of bills also achieves an appropriate balance between fiscal responsibility and the full and appropriate recognition of the unique nature of military service. Firstly, these bills bring ADF super in line with the broader Public Service's move away from defined benefit schemes and towards accumulation schemes. This moves us away from the ever-increasing long-term underfunded liabilities that were created by defined benefit schemes. We are advised that this move will reduce long-term underfunded liabilities by some $126 billion by 2050.

Secondly, the appropriate recognition of military service is achieved through the rate of employer contributions. Here I think a bit of background on the history of this package of bills is appropriate. Originally, those opposite proposed a rate of 15.4 per cent for non-warlike service and a rate of 18 per cent for warlike service. Fifteen point four per cent is the same rate that employees of the Public Service receive. This created a two-tiered system that made a distinction between different members of the Defence Force as well as between different duties of the same member of the Defence Force. Labor opposed this two-tiered system, believing it was cumbersome and created an unnecessary distinction.

There are administrative challenges with implementing such as system, including difficulties that may arise when certain duties are retrospectively identified as warlike. There are also practical issues surrounding when exactly non-warlike service becomes warlike service in what is often a fluid operating environment. These administrative issues do not support the distinction required for this two-tiered system and in their practical application would likely create more problems than benefits.

In addition, the Australian Defence Force has a culture of inclusion, where all members are part of a greater total force. Labor believes that making a distinction in this way is unnecessary to the proper acknowledgement of the unique nature of military service. Military service in unique not only in the way members of the ADF put themselves in danger but also because it includes aspects such as the military code of discipline, the regimented lifestyle, being away from family for long periods and regular relocation at the hands of the posting cycle.

It is for these reasons that Labor opposed the original formulation of these bills and the proposed two-tiered system. It is why we welcomed the decision by those opposite to abandon the two-tiered system and adopt an employee contribution rate of 16.4 per cent. A rate of 16.4 per cent is above the employee contribution for the Public Service, thereby recognising the different working environment within which these two groups operate. It is a reasonable compromise that does not create any of the difficulties that would have been experienced in a two-tiered system.

Finally, these bills also create ADF Cover, which replaces the death and invalidity cover offered by the existing scheme. Given the unique and often dangerous work which our ADF personnel undertake as part of service to their country, accessing death and invalidity cover from group insurance arrangements at a reasonable price is often impossible. ADF Cover creates an avenue for ADF personnel to access these benefits in line with the coverage offered under the Military Superannuation and Benefit Scheme.

Labor has been clear in its commitment to work with those opposite in a bipartisan fashion in matters relating to defence. That is as it should be. However, that bipartisanship should and must always have its basis in good, sound, fiscally responsible policy. Here it does just that. This package of bills and the superannuation scheme they create support the work of Labor in our initiation and development of Project Suakin by facilitating greater flexibility in the way superannuation is dealt with. This builds on the project's original aim and purpose of creating a full suite of options for ADF personnel that reflect the changing circumstances and priorities of an individual member's life, particularly in this modern world. It also strikes the appropriate balance between fiscal responsibility and the proper acknowledgement of the proper recognition of the unique working environment within which ADF members operate.

I am very pleased we are supporting this package of bills and the continued work of Project Suakin. I single out the honourable member for Canberra to commend her for her efforts in putting these measures together and in working so constructively and to such good effect with those opposite. I commend the bills to the House.

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

It is with great pleasure that I rise today to speak on the Australian Defence Force superannuation bills. It is great to follow the member for Batman and to see that this legislation is being done on a bipartisan basis for the benefit of our Defence men and women, who do such a great job for our country. This legislation will establish a new military superannuation scheme for our Australian Defence Force members, to be known as ADF Super. The Australian government is resolutely committed to supporting Australian Defence Force members throughout their service and in their retirement.

Over the winter break, I had the opportunity to spend time with some of our troops at the Shoalwater Bay Training Area near Rockhampton, during Exercise Talisman Sabre. Talisman Sabre brings together more than 33,000 Australian Defence Force troops and US Armed Forces to conduct combined task force operations. It is about improving combat readiness and the ability of our two armed forces to work together on a variety of missions, from conflict to peacekeeping and humanitarian assistance efforts. During my time in Shoalwater Bay, I enjoyed seeing the US paratroopers jump from a C17 after a 22-hour flight from Alaska. It was a sight to behold and a great pleasure to be a part of that.

Visiting our troops was also a great opportunity to discover firsthand the tremendous amount of training and hard work our ADF personnel undertake to prepare for their future missions. Their hard work and their making of huge sacrifices—literally putting their lives on the line for the welfare of our country—are reasons to recognise and appreciate the service that they give. For this reason it is only fair that the Australian government takes care of its Defence personnel both during their service and in the years after.

This commitment has seen the development of this landmark legislation to establish a new military superannuation scheme for ADF members, 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—a new scheme that will continue to provide members of the ADF with death and invalidity cover. Groundbreaking legislation to enable ADF members to seek part-time work, subject to Defence capability requirements, has also been introduced.

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, together with those opposite, have 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, as do the opposition. The Abbott government is committed to supporting ADF personnel and these reforms will help bolster Defence capability. Importantly, these reforms will also improve conditions of service for members of the Australian Defence Force.

ADF Super 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 the current Military Superannuation and Benefits Scheme, MSBS, will be closed to new members from 1 July 2016. Importantly, current serving MSBS members will not be compelled to move to ADF Super, although they can choose to do so. For the first time, ADF members will be able to join the superannuation fund of their choice, with a default military superannuation scheme 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 and is significantly higher than that 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 super. As a result, should serving MSBS members choose to move across to ADF Super they will receive an additional five per cent in their salary because they will no longer have to make five per cent compulsory contributions to the MSBS.

ADF Cover establishes a new statutory death and invalidity scheme that provides the same level of cover as is provided to members of the current MSBS. Due to the unique nature of military service, it can often be difficult for ADF members to obtain death and invalidity cover at a reasonable cost. ADF Cover seeks to address this issue. It ensures all ADF personnel who are members of ADF Super have full death and invalidity cover and it 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. 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 our 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 as well as provide additional flexibility for members of the military. This legislation will also improve the ADF's employment offer, leading to improved recruitment and retention of personnel. Our Defence Force is a modern, flexible and responsive employer, and the introduction of these flexible part-time arrangements for full-time ADF members will encourage skilled and experienced people to stay in the ADF longer.

The government is committed to supporting Australia's Defence Force personnel and these reforms will greatly improve the conditions of service for the ADF. I would like to congratulate our Assistant Minister for Defence, Stuart Robert, on these reforms that will take care of our Defence personnel now and into the future. I commend these bills to the House.

Cathy McGowan (Indi, Independent) Share this | Link to this | Hansard source

It gives me great pleasure to speak about the package of Australian Defence Force superannuation and cover bills and explain to the House why I support them. My speech is in three parts—support for the new superannuation scheme, discussing the importance of defence in my electorate of Indi, and acknowledging the contribution by service personnel. The most valuable resource of the ADF is its human resource—the men and women who are committed to the promotion and protection of Australians' interests at sea, on land, in the air, anywhere at any time. While the men and women of the ADF are protecting our interests, it is essential the government protect their interests. The key interest of workers is superannuation. It is the way workers can accrue funds to replace or supplement their income in retirement.

The bills before the House today are about the here and now, and the introduction of new ADF super and cover schemes is an opportune time to pause and acknowledge the service men and women who today are serving in the ADF and those considering a career in the ADF in the future. Service in the Navy, Army and Air Force is not just a job—it is a unique career. The findings of the Defence Force Welfare Association tell us that the majority of people who enlist in the ADF do not intend to pursue a lifetime service career. An effective ADF fighting force in fact demands a large core group of young adults in its fighting ranks. This core group is constantly renewed by the steady influx of new recruits to keep the core group young. The pay and conditions for service personnel should effectively and comprehensively meet the demanding and unique nature of the day-to-day work involved in fighting. While service could be overseas on peacemaking or in warlike operations, in training establishments teaching trade skills or providing military assistance to the civic community in times of disaster, Australia can and does rely on the men and women of the ADF with confidence, pride and respect.

Noting the need for renewal of the defence workforce with younger personnel, superannuation and the accompanying death and invalidity cover schemes must be relevant, flexible and portable. Currently full time ADF members must be members of two military superannuation schemes—the Defence Force Retirement and Death Benefits Scheme, a defined benefits scheme, and the Military Superannuation and Benefits Scheme, a hybrid scheme because it is part defined benefits and part accumulation. This legislation before the House today provides for a new military superannuation scheme for members of the ADF, and it is an accumulation scheme. The ADF Super scheme has five important features: choice over a superannuation scheme, individuals may join ADF Super or a commercial scheme; the ability to transfer accumulated benefits to another fund if they leave the ADF before preservation age; there is no mandatory member contribution; there is an employer contribution rate of 15.4 per cent, increasing to 18 per cent during periods of war-like service; and the death and invalidity cover under the new arrangements is at least equivalent to current MSBS cover. In a word ADF Super provides choice, flexibility and portability.

I would like to spend a moment talking about the DFRDB Scheme. Noting that ADF Super is the future of superannuation for the ADF, it is timely to reflect on the past, and in particular on the earlier DFRDB Scheme. I am delighted to support the great work of the Indi ex-service community, particularly those still in receipt of the DFRDB. In June, I wrote to the Assistant Minister for Defence in support of two constituents from my electorate, Mr Jim Hislop and Mr Herb Ellerbock. These ex-servicemen have identified several sections in the DFRDB Act in which they submit that the government is failing to meet its obligations to ex-service personnel. On behalf of the veteran community, Jim and Herb spent many hours researching and preparing submissions on two issues—an anomaly for DFRDB recipients who commute, and the method of indexation for members who do not commute. I support the work of Jim and Herb and add my voice to the many voices of DFRDB recipients and concerned ex-service personnel. Thank you for your work. I ask that the government investigate the issues raised and I await a response from the assistant minister.

Defence is highly valued in my electorate of Indi. Indi is gifted to be the home to several diverse and strategically critical defence establishments, in Bandiana near Wodonga and further south near Benalla. These facilities are alive with service personnel, public service staff and civilian contractors, who with their families contribute to their community in so many ways. On Monday 3 August I visited Gaza Ridge, Latchford and Wadsworth barracks as well as the Bandiana neighbourhood community centre, Everyman's Welfare Service and the Army Museum Bandiana. Under the command of Colonel Duncan Polich, the Army Logistics Training Centre provides employment and training for Wodonga and surrounding areas. ALTC maintains an intake of 850 trainees and employs 1,200 Army personnel and civilians. ALTC trains new recruits—currently there are 1,492 in training—and it trains 5,000 students every year spread across 334 courses. ALTC works closely with the Wodonga TAFE, Monash University and RMIT to provide nationally recognised qualifications to military personnel. The facility employs trainers, often ex-military, and they also provide leadership to local youth. Defence Force trainees gain experience through apprenticeships, gaining equivalent qualifications to cert 4 in a medical program or in electrical and mechanical engineering. Trainees may also be selected to participate in additional leadership exercises outside of their normal training including trekking Kokoda, Mount Feathertop and Mount Kosciuszko.

The Joint Logistics Unit—Victoria is an impressive facility run by Colonel Todd Ashurst. The JLUV incorporates 120, 000 square metres of storage providing real-time logistics to the ADF. The facility provides primary support for the ADF in clothing and 50 per cent of the national maintenance, including deep level maintenance such as rebuilds and refreshes to light armoured vehicles and transport vehicles and equipment. Further south near Benalla is Thales Australia, a munitions factory operating under the Domestic Munitions Manufacturing Arrangements Project for the Department of Defence. It is a facility of national significance and is vitally important to our local community in term of ongoing employment and economic impact. The jobs are direct manufacturing jobs in regional Victoria, vital to providing economic stability and growth. I have had the pleasure of visiting this facility on several occasions and meeting with management and workers who are all focused on delivering high-quality munitions. In 2014, with the support of my neighbour, Minister Sussan Ley, the member for Farrer, we lobbied the government to continue to fund the Benalla and Mulwala facilities. The government announced a five-year plan to extend domestic munitions production at these facilities—very welcome, indeed.

The career journey that starts in Defence is often continued when ADF personnel exit the military. Many ex-service personnel head out into the commercial workplace, bringing the skills that they acquired and honed in the military. I meet them regularly in my electorate as small business owners, administrators, HR managers, IT technicians, telecommunications engineers, contractors, electricians, carpenters, public servants and community members. As I move about my electorate, I meet many people who have served in the ADF. It is quite common for people who have served in the Bandiana Military Area to stay in and around the local area; they take up jobs and they contribute their knowledge and skills to their communities.

Today I particularly want to acknowledge and commend several Indi constituents for their contribution to local government: the CEO of the Indigo Shire, Mr Gerry Smith, and the Director of Infrastructure Services at the Rural City of Wangaratta, Mr Alan Clark. I would also like to acknowledge my political adviser, Karen Keegan, who too is ex-Army. The message is that service personnel are a gift that keeps on giving.

It is with pleasure that I inform this place that next week I am participating in the Australian Defence Force Parliamentary Program. I am off to Alice Springs with the Army to be part of the Army Aboriginal Assistance Program, where I will work alongside Defence Force personnel. I am honoured to be able to participate in this program. It gives me the opportunity to see how the Army works, to meet the men and women who have dedicated themselves to this unique and vitally important work. I have spoken to other members of parliament who have participated in the program, and they assure me that I will get great value and insight into the unique nature of the military service. I have already ordered my size 9 steel capped boots. One of the special features of the program is that I get the opportunity to host a member of the ADF in this House this week. Welcome to all the ADF participants to Parliament House, and I particularly welcome and say thank you to Wing Commander Robyn Johnstone, who is working in my office.

Another jewel in the Indi crown is the Hume Veterans' Information Centre located in Wodonga. This centre recently received federal government funding through the Building Excellence in Support and Training program, knowns as BEST. This program is administered by the Department of Veterans' Affairs. The centre is a vital organisation in Indi and without federal government support the centre would be unable to provide the ongoing community support for veterans and war widows. In the past 12 months, the centre has experienced an increase in requests for support. The centre is keen to meet this demand and help where possible. The centre supports the veteran communities not only in Wodonga and surrounds, but in Tallangatta and Corowa and provides in-home support to ensure veterans and widows are safe and being looked after. The centre relies on the help of volunteers to assist our veterans to access services and entitlements. So a warm and sincere thank you to all the people at the centre, but particularly to Kevyn Williams, who is the chairman of the Hume Veterans team; you provide tireless and timely support to the veteran community. We appreciate it and are very grateful. Thank you also to the federal government and Minister for Veterans' Affairs, Senator Michael Ronaldson, on behalf of the Indi veteran community for your ongoing support for the centre.

I have spoken at length, at an earlier time, about the 2015 Anzac Centenary activities in Indi, and it goes without saying that Indi turns out in great numbers to participate in the Anzac commemorative services. I am delighted that on 4 September the Prime Minister will launch the 100-years commemorative exhibition from Wodonga. I look forward to welcoming him to my electorate. The Spirit of Anzac Centenary Experience is the government's travelling flagship exhibition that commemorates the First World War. It will visit 23 locations around Australia over the next 20 months, and Wodonga is the first stop for this travelling exhibition. The exhibition will be open at the Wodonga Sports and Leisure Centre on Friday, 4 September and run until Thursday, 10 September.

It is an exhibition that tells the story of Australia's involvement in the First World War and the ensuing century of service of Australia's armed forces in all wars, conflicts and peacekeeping operations in which Australia has been involved. An important feature of the experience will be the 'local stories' zone. These stories will be created with each local community and contribute a legacy for each region. I am delighted that some local participants in the Anzac $150,000 contribution from the Commonwealth government will be exhibiting.

While the ADF Super and Cover bills are the 'here and now' for the men and women in the Australian Defence Force, the real impact of these bills will be realised when people exit the services or, sadly, when members are medically discharged or die in service. I know that the values of courage, integrity, respect and teamwork underpin the day-to-day work in the ADF. The work is demanding, risky, stressful, tiring, lonely, repetitive and dangerous. The work takes the men and women of the ADF away from their families and friends for lengthy periods of time, often without any notice. It is timely to say again that military service is unique.

I want to place on record my respect and thanks to the men and women of the Australian Defence Force—to those currently serving, to all the volunteers, to those who have served and, sadly, to those who have given their life while serving in the Defence Forces, to their families and friends. Thank you.

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

I rise to speak in support of the Australian Defence Force Superannuation Bill 2015 and related bills. These bills seek to update and modernise superannuation arrangements for members of the Australian Defence Force. The intention is to ensure that superannuation benefits for ADF personnel continue to reflect the unique nature of service relative to other Commonwealth public servants. At the same time, the bills introduce the flexibility and portability that Australians have come to expect from contemporary superannuation schemes.

Since 1991, ADF members have been required to be part of the MSBS—also known as the 'Military Super' scheme. As a defined benefit superannuation scheme, participants are entitled to a defined benefit that is based on years of service and final salary. In contrast, private sector employees and, since 2005, new Commonwealth public servants are generally members of accumulation superannuation schemes. The structure of the MSBS has posed challenges both to ADF members and to the Commonwealth. For ADF members, it has restricted choice by preventing serving ADF members from choosing to be a part of an alternative scheme, a choice that is available to the vast majority of the Australian workforce. It has also restricted flexibility by preventing ADF members from being able to transfer their benefits to another scheme when they leave the Defence Force.

The MSBS has also imposed a significant funding challenge for government. As a defined benefit scheme, it is not fully funded by member contributions and therefore creates uncapped liabilities for government. These liabilities are difficult to manage because the nature of superannuation means that meeting obligations to a young employee today means incurring liabilities that will only be required to be paid in several decades time when that employee retires. In effect, this means that government is incurring debt obligations now and leaving future generations of taxpayers to pay for them.

Successive governments have grappled with the issue of how to ensure sustainability of ADF superannuation arrangements. In fact, these bills are the culmination of an exhaustive process of review and consultation that had its genesis under the former Howard government. In February 2007, the member for Dunkley, who was at the time the Minister Assisting the Minister for Defence, announced a review of military superannuation arrangements. Among the concerns the government noted at the time were the growing unfunded liabilities associated with the MSBS. The findings of that review—the Podger review—were released by the incoming Rudd government later in 2007. The review found that the MSBS fell well short of best practice and recommended its closure and replacement. The details of the replacement scheme were the subject of further consultation with stakeholders, and the successive Rudd-Gillard-Rudd governments were unable to obtain the necessary agreement from veterans groups and other stakeholders in order to proceed with reforms.

On coming to government, the coalition announced the establishment of the National Commission of Audit, which was tasked with, among other things, identifying potential future risks to the structural integrity of the budget. The Commission of Audit identified the MSBS as the only major Commonwealth superannuation scheme with unfunded defined benefits that remains open to new members. It recommended that the MSBS be replaced by an accumulation scheme for new ADF personnel.

The bills that comes before the House today are reflective of the many years of debate, discussion and consultation with affected stakeholders. The bills introduce new, modern and flexible superannuation arrangements for people joining the ADF on and after 1 July 2016. For the first time, ADF members will have the flexibility to change superannuation funds and join a superannuation fund of their choosing.

Importantly, ADF members will receive a generous employer contribution rate of 16.4 per cent, irrespective of their choice of superannuation fund. This exceeds the 15.4 per cent offered to Australian public servants and well exceeds the 9.5 per cent available to the majority of Australians through the Superannuation Guarantee. Under the new scheme, serving ADF members will no longer be required to contribute a portion of their salary to their superannuation scheme. Existing ADF members will have a choice as to whether to transfer to the new scheme or remain in the existing MSBS. However, ADF members who elect to transfer to the new scheme will receive an immediate increase of five per cent in their take-home pay—five per cent being the minimum amount that they were previously required to pay into the MSBS. As a consequence of the introduction of the new scheme, the MSBS will be closed to new members from 1 July 2016.

The changes proposed in these bills bring the Australian Defence Force superannuation arrangements in line with the realities of modern work. The workforce composition of the ADF has changed in recent decades, mirroring trends in the wider workforce. Increasingly, ADF recruits are spending shorter portions of their career in Defence. They are seeking to join the ADF, serve their country while gaining job skills and then use those job skills to transition to careers outside of Defence.

When it comes to recruitment, the ADF is beginning to move with the times. Particularly in specialist categories where recruitment is difficult, the ADF is now advertising itself as an option for young people who want to gain skills that they can use later in their career outside the ADF. As a consequence, generations of recruits coming through are not seeing a Defence job as a job for life. However, the old MSBS superannuation arrangements were acting as a barrier to ADF positioning itself as a modern employer. The unique nature of its defined benefit arrangements based on years of service act as a disincentive to leave the ADF, and the lack of portability of superannuation reduces the attractiveness of a Defence Force career for prospective recruits.

At the same time, these bills demonstrate the coalition government's commitment to charting a responsible course back to surplus. By closing the MSBS to new members, the government is taking action to minimise uncapped future liabilities that would otherwise have been borne by future generations of taxpayers. In the 2014-15 budget papers, it was estimated that the impact of the closure of the MSBS from 1 July 2016 will reduce unfunded superannuation liability by a staggering $126 billion by 2049-50.

The evolutionary nature of this legislation means that stakeholders have had ample opportunity to understand and accept the rationale behind the changes proposed. The government accepts that superannuation is a contentious area of policymaking and that change by its very nature advantages some more than others. However, I am advised that organisations such as the Defence Force Welfare Association, or DWFA, have expressed broad support for the closure of the MSBS and the establishment of an accumulation scheme for ADF members. I note that the DFWA and other organisations, such as the Alliance of Defence Service Organisations and the Returned and Services League of Australia, expressed concern at an earlier proposal to set the contribution rate at 15.4 per cent, the same as for other Australian public servants. In response to their feedback, the government has proposed an increased rate of 16.4 per cent in recognition of the unique nature of the Australian Defence Force service. In response to stakeholder feedback, the government has also elected not to proceed with a two-tiered contribution rate that distinguishes between 'warlike service' and other service.

The position that has been reached is one that, I am advised, is acceptable to the Labor Party and I acknowledge their support for these bills. To the extent that it is possible, I think that bipartisanship on matters relating to Defence is in the best interests of serving personnel. Bipartisanship on this issue is an indication that the government has the balance right on reform of ADF superannuation.

In reforming Australian Defence Force superannuation the government wants to achieve three objectives: firstly, it wants to ensure that ADF personnel remain adequately supported by a superannuation scheme that recognises their service to this nation; secondly, it wants to ensure that a Defence Force career remains an attractive proposition to young Australians; and, thirdly, it wants to ensure that future generations of Australian taxpayers are not saddled with debt obligations that this country cannot afford. These bills ensure that the government fulfils all three objectives and ensures that long awaited reforms to Australian Defence Force superannuation are responsibly delivered. I commend these bills to the House.

Ewen Jones (Herbert, Liberal Party) Share this | Link to 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—

Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

Nice crawling!

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

in the mid-thirties. For guys who have gone through this, there is the growth of their superannuation and lack of ability to make the nest egg even better with the rigidity of the current system. That is what really gets under their skin. That is what they want addressed.

I want to address the rate of superannuation for military personnel. Some people may think that service personnel get it pretty good, but I am here to tell you that in my city, when it comes to ADF personnel, we ask a lot of them. We hire a specific kind of person and we ask a lot of them. Very few jobs in this country require you to routinely carry 45- or 48-kilo packs, jump out of the back of trucks, jump out of the back of helicopters and the like and be prepared to go, at a moment's notice, anywhere in the world for these things. Wear and tear is part of your job.

My nephew has just joined the Army. He has just finished at Kapooka. He is one of the few guys who came through and will be getting an apprenticeship. He is very keen on his fitness and very keen on joining up. He wanted to go down the fitter and turner line to work on calibrations, making guns and helping with those sorts of things. I stressed to him, 'Please, please, please, don't join the infantry,' because when you finish in infantry you have shoulder problems, back problems, hip problems, knee problems and ankle problems. That is just par for the course. No matter how fit you think you are, you are hurting yourself every day when you are in the ADF. It is the nature of service that they do. I will explain my nephew's recruitment process—the way the ADF is changing the way they are hiring. They still look for the type-A personality; they still look for the person who is able to make decisions and is able to train for those decisions. When my nephew was going through the recruitment process, I was interested in hearing from him firsthand about what they were talking to him about. They wanted to know what kind of person he was, what kind of man he would become and how he would contribute to his society. An Army person, an Air force person, a Navy person or a person on the city street may not think that those questions are relevant. We are trying to make sure that we are hiring the right sort of person.

The ADF is a changing organisation. We are lucky that we probably have the highest paid soldiers, sailors and airmen in the world. Recently at the operation Talisman Sabre at Rockhampton, I was talking to a US army colonel. He said, 'I'm very interested in the support that you give your soldiers by way of pay, because it is a lot better than ours.' That does not mean that they are overpaid. There is the level of training that they go through. We have a different kind of Army. With the size and scale of the US Army, you have the necessary workforce and you are able to keep pushing people forward. We have a small to medium sized Army with a small to medium sized Defence Force. We require an intelligent soldier, an intelligent sailor and an intelligent airman or air woman. We must make sure that we are in that space and that we are able to provide the level of support required to make sure that they are available to give their best performance at the best possible time. We have a different kind of soldier to other armies. We are smaller, we have to be more adaptable, we have to be smarter and we have to be more intelligent. The basic soldier, sailor or Air Force person in this country is very clever. We must make sure that we do those things.

My electorate is one of the youngest electorates in the nation, but I have one of the largest veteran populations as well. The sorts of issues at play in this space must be taken care of because it reflects across my entire community. We must ensure that we leave the door open. When someone gets out of the Army, Navy or Air Force the door needs to be open for them to come back, even on a part-time basis to put their toe back in the water. What someone is like as a 25-year-old when they have done their eight or nine years on initial deployment is going to be completely different to what they are like as a 35-year-old who may have been married, had a couple of kids, has settled down in the community and is maybe looking for stability. We have to make sure that in our community we have the circumstance where people can come back into the service. It is not just about turning up on a Tuesday night for a march and a bit of a chat but coming back on a part-time basis, putting their toe in the water and saying, 'Can I rejoin? Should I rejoin?' They need the ability to work on a part-time basis and, as long as the ADF is in agreement, they would be able to provide as much income as they are prepared to make for their entire family.

In this place, we have to make it as easy as possible for people to transition back into the service, because we invest an awful lot of money in their training. The LHD is currently in Townsville and is about to do exercises in the Coral Sea. Major General Stuart Smith is in my city. When he talks about the training of soldiers for combat conditions, he talks about making sure that it is not so much a learned response but muscle memory, so that that is what you do. That is the level of training that is required in this space. That is why we have to continue to make sure that our training is the best, that our support is the best, that our medical is the best and that our superannuation is the best—superannuation and retirement benefits for the men and women who put their lives on the line on a daily basis to keep our country safe. At the end of the day, we have a very safe country and it is in no small measure due to the work that our Defence Force personnel do on the outside. With those few words, we commend this bill to the House. We hope it goes through and that by 1 July 2016 we will be up and away. I thank the House.

Debate interrupted.