Ms JULIE BISHOP (8:12 PM) —I am pleased to be following the member for Wills in this debate. We shared a platform recently at the University of New South Wales at the launch of a seminar on Women and Superannuation, when I was able to inform the gathering of the federal government's support for superannuation initiatives, recognising as we do that for many Australians superannuation is at the heart of their retirement plans. I was also able to speak of the reforms that have been introduced that are of particular benefit and interest to women, including the changes to the Family Law Act enabling superannuation to be dealt with on divorce, on separation, as part of the overall financial settlement between divorcing couples—addressing the anomalies that were inherent in the Family Law Act regarding superannuation.

In following the member for Wills this evening, I report to the House that the bill before the House, the Superannuation Legislation Amendment (Indexation) Bill 2001, represents a widely welcomed initiative in the 2001 federal budget. By amending the Superannuation Act of 1922 and the Superannuation Act of 1976—that is the legislation that provides for the payment of superannuation style pensions to former civilian employees of the Commonwealth of Australia—this bill will provide that, from January of next year, these pensions will be indexed twice a year. At present these pensions are adjusted annually in July on the basis of upward movements in the consumer price index. Downward movements in the CPI do not affect these pensions, although decreases in the CPI are offset against subsequent increases. In July this year, for example, Commonwealth superannuation pensions were increased by six per cent. So, after the passage of this bill, the new arrangements will ensure that adjustments occur in both January and July on the basis of CPI increases in, respectively, the preceding September and March quarters. For example, these pensions will be indexed this coming January and next July.

The effect of this measure will apply not only to recipients of the 1922 superannuation arrangements—which were in fact closed to new entrants in 1976—and members of the Commonwealth Superannuation Scheme but also, through some rule changes in the trust deed of the Superannuation Act 1990, to members of the Public Sector Superannuation Scheme. It is noteworthy that many people who will benefit from this change will have also benefited from other initiatives in the 2001 budget. This would include those persons able to access the Commonwealth seniors health card and the related telephone allowance, recipients of the $300 payment to low income aged persons and those older taxpayers on low or middle incomes who will now have an effective income tax free threshold of $20,000 annually. The same budget increased aged care service funding by $425.9 million and made some important changes to veterans' affairs, through the $25,000 payment for former prisoners of the Japanese and the restoration of the war widows pension to remarried war widows.

It would be remiss of me not to point out that there have been a number of concerns raised with the government regarding the reforms before the House tonight. Those concerns have been raised with me personally by a number of my constituents with an interest in these matters. Some have queried why the superannuation pensions available to former Commonwealth public servants are not indexed in the same manner as the pensions paid to former members of the Commonwealth parliament. Those parliamentary pensions are indexed by reference to parliamentary salaries, which are in turn linked to wage movements. The question of parliamentary remuneration is one of concern for members of the public and of this place, and it is to the credit of the Prime Minister that he championed the reforms to parliamentary superannuation passed by this parliament earlier this year, including the introduction of an age restriction on access to superannuation benefits in line with community expectations.

Perhaps the most contentious issue in this matter is the continuing use of consumer price indexation for the adjustment of superannuation pensions for former public servants in preference to other indexation measures, including those related to wage movements. The first point to be made in this regard is that such a change would be a significant departure from the past practice of the Commonwealth and the original terms of the superannuation schemes in question. Secondly, it would also be a departure from the arrangements made and maintained to this day by state and territory governments for their former employees. So these reforms are consistent with state and territory arrangements for indexing superannuation pensions. Other means could be used to measure cost of living and price changes in Australia, but alternative measures would, like the CPI that measures the rate of change in prices of a wide range of goods and services, also be averages. Averages do not necessarily reflect individual experience, which of course can vary according to factors including lifestyle and geographical location.

It is important to note that benefits payable under the various Commonwealth superannuation schemes are more generous than benefits payable to other Australians. As at 30 June 1999, the notional employer contribution rate was 21.9 per cent for the Commonwealth Superannuation Scheme and 14.2 per cent for the Public Sector Superannuation Scheme. By contrast, most employers would today make a contribution of eight or nine per cent.

Furthermore, it is true that inflation is very low in an historical context—it has averaged 2.2 per cent annually since this government came to office—but it is also true that interest rates, upon which many other retirees rely for their retirement incomes, are historically very low. We can become blase about the economic success in this country, particularly over the past half decade, but the reduction in interest rates paid by families, home owners and businesses has been quite extraordinary. To take just one example, small business overdraft rates have fallen from over 20 per cent in 1989 to around eight per cent today.

Queries have also been raised regarding the Australian Defence Force. This particular reform was not intended originally to affect those superannuation pension schemes accessed by former service men and women and officers. As members of the House would be well aware, the remuneration arrangements of the Australian Defence Force are presently under detailed consideration by the government, and the committee charged with the responsibility of reviewing those arrangements—a committee chaired by retired Major General Barry Nunn—reported to the Minister for Defence on 31 August, and the minister and his fellow ministers are presently considering that report.

However, I am pleased to note that earlier today the Minister Assisting the Minister for Defence advised that, further to the recommendations made by Major General Nunn, twice-yearly indexation will be introduced for military superannuation pensions—that is, the Defence Force Retirement Benefits scheme, the Defence Force Retirement and Death Benefits scheme and the Military Superannuation and Benefits Scheme. The member for Wills may well try to take some sort of credit for this, but it is further to the advice of Major General Nunn, who has been charged with the responsibility of reviewing remuneration arrangements of the Australian Defence Force.

The announcement today will ensure that both military and civilian superannuation pensions will be adjusted on 1 January 2002 and 1 July 2002 so as to reflect any increase in the consumer price index for the six months ending in the September quarter of 2001 and the March quarter of 2002 respectively. I certainly look forward to the government's further response to the Nunn report. I know that such a response will be of great interest to those service men and women in my electorate of Curtin, including at the SAS regiment at Campbell Barracks, as well as a number of my constituents who have had considerable defence experience and who take a great interest in the conditions, wellbeing and morale of our defence forces.

The bill before the House will increase the purchasing power of some 100,000 Commonwealth superannuation pensioners and, after today's announcement by the Hon. Bruce Scott, 55,000 recipients of military pensions by reducing the delay between price increases and compensatory adjustments to their superannuation pensions. This represents a $30 million per annum increase in funding by the Commonwealth for the civilian pensions alone, and the reform certainly deserves the support of all members of the House. These amendments to the Superannuation Act 1922 and the Superannuation Act 1976 to provide for the pensions to be indexed twice a year from January of next year have certainly been welcomed in the community. I commend the bill to the House.