Andrew Murray (WA, Australian Democrats) Share this | Hansard source

The Parliamentary Superannuation Amendment Bill 2006 seeks to increase the contribution of the government—for the purposes of this legislation, the employer—to a member’s or senator’s superannuation account from the present nine per cent to 15.4 per cent. This will apply to all members and senators elected from 2004 onwards. It will be 15.4 per cent of the sum of: the amount of parliamentary allowance to which the person is entitled in the month; the amount of any salary to which the member is entitled because he or she is or was a minister of state for some or all of the month; and, the amount, if any, of allowance by way of salary to which the member is entitled because he or she was an office holder for some or all of the month.

The bill computes a four-year cost to revenue of $3 million, so it is not exactly a vast sum of money that is at issue here. But, of course, this matter has public interest because of the way in which the public and the media attend to issues of parliamentary wages and conditions of service. As far as I understand it, the principal rationale behind this bill comes from growing bipartisan disquiet—I use the word ‘bipartisan’ as opposed to ‘cross-party’, which I usually prefer—among the 22 members of the House and 17 senators who came into parliament at or after the 2004 election, and that disquiet has been supported by most of their colleagues. Those MPs and senators think it inequitable that there is one set of arrangements for some members of parliament and a different, lower set for others. As the shadow minister quite rightly points out, that is not uncommon in the Australian community; but, in general, if the difference between those under previous conditions and those under new conditions is wide, it does create agitation and irritation.

We all recognise that many in the media and in the public oppose in principle increases of any kind in parliamentary entitlements. Others who focus on superannuation will argue that politicians’ retirement benefits should be at the minimum employer contributions level applying in the general community, which is nine per cent, rather than the public service community contributions level of 15.4 per cent. Of course, once again, I should point out that there are many who are not public servants who in fact enjoy schemes at contribution levels in excess of nine per cent. Nine per cent is the minimum contribution required.

It should be emphasised—and it is, again, a point made by the shadow minister—that the new 15.4 per cent scheme, while better than the nine per cent minimum employer contributions level scheme, is still inferior in total to the old Parliamentary Contributory Superannuation Scheme, which applies to all senators and members elected prior to 2004. If the proposed arrangements are passed by the Senate, the difference will still be that the Commonwealth’s notional contribution to those elected before 2004 will remain about 70 per cent of a parliamentarian’s income in total.

Many in the public—perhaps the majority, from my experience—believe that politicians are overpaid through perks, fringe benefits and superannuation entitlements. Their view as expounded through surveys does not seem to have altered at all for the better since the community super measure of nine per cent was applied to post-2004 federal politicians. You would think, if you had acted to get rid of a burr under the saddle of public opinion, you might see a positive response—but I am afraid not. As those changes have not resulted in a better public opinion, and public distrust and cynicism remain at what are perceived as the double standards of politicians, many federal politicians I know assert that there is no point in ever trying to satisfy that sort of opinion because it cannot be satisfied—and neither is there much danger in introducing a marginally better or more generous scheme such as we are debating here. In other words, those politicians feel that they are damned whatever they do, so why worry? Perhaps that is going a little too far, because you must obviously pay attention to general public opinion. Nevertheless, it is clear to me that a slightly more generous parliamentary superannuation scheme, at a 15.4 per cent employer contribution, than that for a population as a whole at a nine per cent employer contribution does and will attract criticism, and I note that some of those opposed to this in this chamber and in the House have that very view.

The Democrats themselves were unashamedly opposed to the generous scheme that all parliamentarians were on, feeling that it was far too generous. In 1996, for instance, we won a reference to the Senate Select Committee on Superannuation. The unanimous conclusion of this committee, which reported in 1997, was:

The Committee considers that change to the Parliamentary Contributory Superannuation Scheme is desirable. The scheme is now out of step with superannuation practice in the wider community. There is convincing evidence that it is excessively generous to a small group of retiring parliamentarians.

The fact is that that committee recommendation has been acted upon by the government. The new scheme is now in line with the general community standard for public sector employees, and there are vast numbers of them. In fact, the current arrangements are that either nine per cent of a member’s or a senator’s parliamentary income per year is paid into a superannuation fund of their choice or, if the member or senator does not choose a particular fund, the payments are made into the Australian Government Employees Superannuation Trust, which, of course, is the same as applies to the people who work for me and the people who work throughout this parliamentary building overall.

In the bad old days of the excessively generous scheme, the Democrats did move amendments in the Senate to reduce the generosity of the Parliamentary Contributory Superannuation Scheme, and those were rejected at the time. But in mid-2004, under pressure from Mr Latham, the then leader of the Labor Party, a change was made and superannuation benefits for parliamentarians were considerably scaled down to the scheme that currently applies. I want to emphasise that the Democrats, throughout the period when the nine per cent rule was being introduced for the general community by Labor—and everyone is aware that that was introduced on a stepped and graded basis—very strongly supported the introduction of a compulsory employer superannuation contribution. But we supported it as a minimum, not as a maximum.

I have heard, amongst many others, former Prime Minister Paul Keating argue that the nine per cent needs to be increased. Some people argue that it should be increased by a greater contribution by employees—in other words, nine per cent from the employer and a percentage from the employees—and other people argue that it should be lifted by employers. But I stress that much of the specialist and expert opinion on matters of superannuation does regard nine per cent as too low. Certainly my own party regards it as a minimum.

On the nature of this bill, we say that the old scheme—the unfunded defined benefit scheme where employee contributions were a fixed percentage of 11.5 per cent of salary—is but a small contribution towards the pension’s cost. The untaxed benefits paid from this fund are generous and produce a high fixed retirement salary which, as I understand it, can lift to 75 per cent of the leaving salary for those who have very long service in the parliament. The new scheme for post-2004 parliamentarians is nine per cent of salary at present, and this bill will raise it to 15.4 per cent. It is important to note that the retirement benefits depend on the accumulation over time, and contributions earnings are subject—at present at least—to the superannuation fund income tax at the nominal rate of 15 per cent. It is a markedly less generous scheme. The question is whether we make a markedly less generous scheme a little more generous or not.

There are two areas I want to briefly cover off again. Members familiar with my views and my party’s views in this area will recognise that we have campaigned over many years for a much more holistic and work-value-oriented examination of federal members’ and senators’ salaries and, indeed, of ministers’ salaries. I repeat again my view that people like the Prime Minister and the Treasurer are grossly underpaid for the work that they undertake—by comparison with the leaders of other countries rather than the more common comparison with executives of companies.

I and my party are of the strong view that the Remuneration Tribunal does need to look at a parliamentarian’s salary package as a whole, at what they need to do their job as a whole and at the retirement package as a whole. That retirement package is what we are dealing with here, in isolation. But of course there are other elements to a retirement package, such as retirement travel benefits—including entitlements available under the Life Gold Pass which, frankly, I and my party argue should be done away with. There is no merit in the Life Gold Pass perk in our view.

Coming to the bill, our view is that the change is not unreasonable, since this bill and these proposals are consistent with those of the public service as a whole. We recognise that it is politically popular to attack politicians’ conditions of service. We also recognise that some people have a genuine view that politicians are very well paid and should not get any further advance in their conditions.

In view of the Democrats’ past positions, many might think we would oppose this bill. But of course we opposed the former scheme, which was excessively generous. We do not regard a 15.4 per cent employer contribution scheme, which accumulates over time and where the final pension is dependent on that accumulation over time, as excessively generous. I would be interested to see, for senators who are not re-elected or who retire after six years’ service—and I think we are only in a position really where they are probably not going to be re-elected—what the effective benefit to them of their superannuation contributions will be. I suspect it will be very low, as it will be for members. It would be quite interesting if the government had those figures. The Australian Democrats will be supporting this bill.