Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Hansard source

The answer to the first question is yes and the answer to the second question is yes. As to the issue of interdependency in public sector super schemes, while there has been no decision announced on that matter in this budget, it is a matter that we keep under review. It is certainly true, as Senator Murray alludes, that to change the policy with respect to interdependency would add some $2 billion to the unfunded liabilities which taxpayers must carry. That would be as a result of a policy change. The growth in the unfunded liability to which he previously referred, the additional $8 billion, is simply a function of existing policy and the fact that the military schemes remain open.

As you know, the government—indeed under my watch as minister for finance—has closed the PSS and all new public servants go into the accumulation fund, and I welcome warmly the public sector unions’ support for that move that we made a couple of years ago, with great cooperation from the relevant public sector unions. What is contemplated with respect to interdependency is of course a specific change in policy which of itself would add $2 billion to those unfunded liabilities.

That is not an easy policy decision to make; nevertheless, what we have done in this budget is provide much greater flexibility to existing public servants with respect to their superannuation arrangements by ending the compulsory contributions required of them to the PSS and to provide choice of funds for public servants so that those who wish to have much more flexible arrangements with respect to their superannuation will now be able to elect to go into the fund of their choice, whether it be the PSSAP or a private sector fund.

I think that is quite a significant policy change on our part. It is one that I have been keen to see happen and I am glad that we have been able to achieve it. It will mean that those who may be in the categories to which Senator Murray refers that wish to have more flexible arrangements with respect to their superannuation can elect to move now into an alternative fund. I welcome that change. It will mean a difference for existing public servants, albeit I acknowledge and understand that former public servants on current Public Service pensions, who may be in an interdependent relationship of the kind Senator Murray refers to, will not be assisted by that change, as welcome as it is. All I can say is that the fact that it carries a $2 billion unfunded superannuation liability price tag is not insignificant and it does weigh upon the government. Nevertheless we will keep the matter under review.