George Brandis (Queensland, Liberal Party, Attorney-General) Share this | Hansard source

I present the explanatory memoranda and I move:

  That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

The Australian Government is resolutely committed to supporting Australian Defence Force (ADF) members throughout their service and in their retirement.

The Australian Defence Force Superannuation Bill 2015 (the Bill) gives effect to the Government's intent to introduce new, modern and flexible superannuation arrangements for people joining the ADF on and after 1 July 2016. The Bill establishes a new superannuation scheme to be known as ADF Super.

The Bill fixes some of the longest running grievances of the veteran and ex-service community, namely a lack of flexibility in the current military superannuation scheme and the lack of portability of a member's superannuation benefit when they leave the ADF.

At the outset I thank the Defence Force Welfare Association, the RSL and the Australian Defence Association for their feedback and for supporting this legislation. I also acknowledge the opposition for their support for this important set of changes.

ADF Super forms a significant part of the Government's plan to provide flexible service arrangements for all ADF members. Importantly, as part of this plan current serving personnel who are members of the Military Superannuation and Benefits Scheme (MSBS) may opt to join ADF Super, but they will not be compelled to do so.

ADF Super will be a modern, fully funded accumulation superannuation scheme.

ADF Super will, for the first time, allowADF members to choose the superannuation fund they belong to. It will provide superannuation choice and enable ADF members to select any complying superannuation fund to invest their superannuation benefit.

A default military superannuation fund will be established and managed by the Commonwealth Superannuation Corporation, which is the trustee for the major Commonwealth superannuation schemes, including the current and past military superannuation schemes.

In recognising the unique nature of military service the Government has agreed to a single employer contribution rate of 16.4 per cent, which is a generous rate well above community standards.

ADF Super will apply to:

Contributing DFRDB members do not have the option to transfer to ADF Super.

The current MSBS will be closed to new members from 1 July 2016.

Unlike previous military schemes, such as the MSBS which requires a minimum employee contribution of 5 per cent of salary, there will be no requirement for ADF Super members to make employee contributions to their superannuation.

As a result, contributing MSBS members who choose to become ADF Super members will immediately receive a 5 per cent increase to their take home pay as they are no longer required to make compulsory employee contributions.

Accompanying ADF Super will be a new statutory death and invalidity scheme, known as ADF Cover. ADF Cover will be consistent with the death and invalidity arrangements ADF personnel currently receive as MSBS members. It will ensure that ADF members are properly looked after, for the rest of their life if required, in the event they are injured during their ADF service.

ADF Super recognises the unique nature of military service, and importantly, provides greater flexibility for individuals in how they manage their finances at various stages of their working life.

I commend the Bill

Australian Defence Force Cover Bill 2015

SECOND READING SPEECH

The Australian Defence Force Cover Bill 2015 (the Bill) gives effect to the Government's commitment to introduce new, modern superannuation arrangements for people joining the Australian Defence Force (ADF) on and after 1 July 2016. The Bill establishes a new statutory death and invalidity scheme to be known as ADF Cover.

Due to the unique nature of military service it is often difficult for ADF members to obtain death and invalidity cover at a reasonable cost under group insurance arrangements. ADF Cover addresses this issue by ensuring all ADF personnel who are members of the ADF Super scheme have full death and invalidity cover.

ADF Cover provides all members who join on and after 1 July 2016 with death and invalidity cover consistent with that provided to members of the current Military Superannuation and Benefits Scheme (MSBS). It will apply regardless of the superannuation fund chosen by the ADF member.

As is the case for current MSBS members, ADF members will not be required to make any contributions to ADF Cover and all benefits paid under ADF Cover will be met from consolidated revenue.

Benefits for Incapacity

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.

If that capacity is reduced by 60 per cent or more, they will be classified as Class A and receive an appropriate pension.

If that capacity is reduced by 30 per cent or more, but less than 60 per cent, then they will be classified as Class B and receive an appropriate pension.

If a member ' s capacity is reduced by less than 30 per cent they will be classified as Class C and their superannuation will be preserved in the fund of their choice. The preserved benefit is subject to the normal age preservation rules for release.

Under ADF Cover the death and invalidity benefits provided will be consistent with the death and invalidity benefits provided under the current MSBS.

Benefits for Death

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.

In the case of an invalid or ADF member who dies, their spouse (if any) will receive a reversionary pension or lump sum. The pension will be increased if there are eligible children. If that spouse later dies and was themselves receiving a pension, any eligible children will also receive a reversionary pension.

If an invalid dies with no spouse but with eligible children, the eligible children will receive a reversionary pension. If an ADF member dies in service with no spouse but with eligible children, then the eligible children will receive a lump sum. In the case of an ADF member who has no spouse or eligible children, a lump sum will go to the estate or the legal personal representative of the ADF member.

ADF Cover recognises the unique nature of military service and offers important protection for ADF members and their family consistent with that provided under the current MSBS.

I commend the Bill

Measures to implement ADF Super and ADF Cover

The Australian Defence Legislation Amendment (Superannuation and ADF Cover) Bill 2015 (the Bill) contains the consequential amendments necessary to establish the ADF Super and ADF Cover arrangements. In line with the Government's drive to cut red tape, the Bill also contains a number of measures to reduce the administrative complexity of the current and previously closed military superannuation schemes.

Measures for Children

The current Military Superannuation and Benefits Scheme (MSBS) and closed Defence Force Retirement and Death Benefits (DFRDB) scheme provide pensions for children of deceased Australian Defence Force (ADF) members and former ADF members. To qualify for a benefit, children over 16 must demonstrate they are in full-time education.

In contemporary Australia the majority of high school students do not leave school until they reach 18. This Bill modernises the arrangements of the current and closed schemes so that children only have to demonstrate they are in full-time education once they reach the age of 18.

This will reduce the administrative burden on families receiving a benefit under the current and closed military schemes, as well as the burden on the administrator of those schemes.

Re-entered Members

At present all DFRDB retirement pay recipients who re-enter the ADF full time or as a Reservist on Continuous Full Time Service must make an election to either become a MSBS member, not become a MSBS member or to again become a DFRDB contributing member before commencing their further service.

If no election is made or the election is not made before commencing re-entered service, the re-entered member becomes a MSBS member by operation of the law.

If the person elects to become a member of the MSBS their retirement pay is suspended until such time they complete their period of service.

If the person elects to again become a DFRDB contributing member their retirement pay is cancelled and recalculated after the further period of service is completed, noting that the additional service must be for more than 12 months for this to apply.

After 1 July 2016, all DFRDB scheme retirement pay recipients who re-enter for further service will be able to choose which superannuation fund they belong to, noting they cannot re-join the closed DFRDB scheme.

Importantly, they will continue to receive their retirement pay while accumulating further superannuation benefits in the fund of their choice. Put another way, they will no longer have their retirement pay suspended or cancelled as is currently the case.

Likewise, those members currently receiving a MSBS pension who re-enter for a further period of service will also be able to join a superannuation fund of their choice, again noting they cannot re-join the closed MSBS. They will also continue to receive their pension during that period of service while accumulating further superannuation benefits.

Flexible Service

The Bill also facilitates the introduction of significant reforms to the ADF's future workforce model. This Bill enables a new category of flexible service for members of the Permanent ADF.

Defence is a modern, flexible and responsive employer. The introduction of Flexible Service Arrangements will better secure the ADF's capability by:

The Bill will enable permanent ADF members to seek flexible service arrangements that can be structured on the number of days worked per week, weeks per month, or even months per year.

Importantly, the application of the flexible service arrangements will remain cognisant of the need to balance the ADF member's needs with Defence's capability requirements.

ADF personnel should be encouraged to pursue longer-term and worthwhile careers within a modern and innovative Defence Force. This Bill facilitates the introduction of a new workforce model and will help to ensure Defence get the most out of its people and those people get the most out of their Defence career.

I commend the Bill

Debate adjourned.