Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

I move:

That the Senate take note of the document.

This report, which was tabled out of sitting, is a report by the Australian Government Actuary. For those who are not familiar with the work of an actuary, an actuary is a highly skilled and trained mathematician who is responsible for combing sets of social and economic indicators and assumptions over a forward period—10, 20, 30 or 40 years—with mathematical formulas and calculating costs through to the long-term future. Actuarial work is an extremely demanding science. It is certainly an occupation that I have considerable respect for. It is quite possible to predict with a considerable degree of accuracy costs into the long-term future.

The Australian Government Actuary in our system is a relatively small unit of about half-a-dozen people located within Treasury. However, it is not statutorily independent. One Labor policy that has been announced in this area is to make the Australian Government Actuary statutorily independent. As a consequence of that, it will not be able to be directed with respect to its work. The statutorily independent Government Actuary will under the Labor policy be charged with independently reporting on and analysing not just superannuation schemes but a range of other things. It is modelled on the UK government actuary. It will have a much more important, central and independent role, for example, in the calculation of the Intergenerational Report, which we have heard a great deal on recently. That report is a general projection of costs across a whole range of government outlays through to 2042.

This specific report is interesting in the context of the Future Fund, which we have again heard a great deal about in recent times. The Government Actuary has updated, as at 30 June 2005, the actual and projected Commonwealth outlays through to the years 2044-45. It is done every three years. Because circumstances can change, it is important to have as accurate as possible actuarial projections of what is likely to occur through to the year 2044-45 The two military schemes, together with the now closed public sector defined benefit funds and a number of much smaller schemes—the parliamentary schemes, the judges scheme and the Governor-General scheme—make up a series of liabilities that will require funding through to the year 2044-45.

What I found interesting about this Australian Government Actuary report was the way in which the projected liabilities have been updated and will in fact change. On page 7 of the report the present value of unfunded liabilities is updated. On the last occasion, as at 30 June 2002, there was some $27.1 billion of liabilities as a consequence of the Military Superannuation and Benefits Scheme and the Defence Force Retirement and Death Benefits Scheme. The three-year update shows that the liabilities then calculated have been updated to $32.1 billion. That is an increase of approximately $5 billion in terms of the actuarial projected upgrade.

That in itself sounds like a significant figure—a $5 billion increase in liabilities—however, as a percentage of gross domestic product, of the total value of the economy, the liability has declined, because economic growth is growing faster than the liabilities. The projected percentage of GDP on 30 June 2002 was 3.8 per cent. It in fact declined to 3.6 per cent as at 30 June 2005.

Question agreed to.