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Thursday, 5 May 1994
Page: 297

Senator SHERRY (Parliamentary Secretary to the Minister for Primary Industries and Energy) (10.54 a.m.) —I will not thank honourable senators from the Liberal-National Party opposition for their contribution in some areas; but I will acknowledge that they support this legislation and thank them for that.

  I noted that Senator Chapman referred to the privatisation of the bank and that it was a tragedy that it was happening. I thought it was opposition policy to privatise institutions such as banks. Certainly, when I was in the chamber yesterday, Senator Short made that very clear.

Senator Minchin —You misrepresent him.

Senator SHERRY —To be fair to Senator Chapman, he may have been criticising the circumstances rather than simply the fact that the bank was being privatised. Senator Kernot raised two specific points that I wish to address. The first point is the issue of what we believe is the $45 million in unfunded superannuation liabilities. I am advised that when the federal government commenced negotiations with the state government it was not aware of the extent of the unfunded liabilities in the superannuation fund, although it was certainly aware that an unfunded liability existed.

  The figure may not be $45 million; it may be some figure greater than that. The reason we cannot be precise about it is that the liabilities increase the longer that the bank is in state government ownership, because that liability continues to accrue for the employees under the government scheme. Depending upon the date of sale, we will then have a precise figure on the unfunded superannuation liabilities.

  There are other factors that will affect the unfunded superannuation liabilities, such as the number of employees that are with the bank on the date of sale. Some employees may take early retirement; some may take some form of redundancy payment. So the precise figure will become available only upon the date of the sale of the bank. I am advised that the figure could be anywhere between $45 million and $60 million.

  The federal government took the view that it was not prepared to enter into a deal or a package that had an open-ended cost in the superannuation area. During the course of negotiations, when the unfunded liabilities in the superannuation area were discussed, the government put forward the view that it would not enter into an open-ended commitment in this area and that, as part of the total compensation package of $600 million, this liability should be included. I think it needs to be looked at in that context.

  From the South Australian government's point of view, it is a good package. It would be unreasonable to expect the Commonwealth to have entered into some agreement which said $600 million-plus, depending on the sale of the bank and the superannuation liability. It simply was not prepared to do that. Certainly the state government would have liked as much money as it could get; we are sure of that. But the final package reflects that particular provision on superannuation.

  It is a sad fact that most government superannuation funds in this country are substantially underfunded. Senator Kernot, Senator Watson and I know that because of our involvement with the superannuation committee. All states except Queensland, all governments—Labor, Liberal and National Party—going back to before World War II when most of the government schemes were introduced, have not funded their superannuation funds. So why should the Commonwealth pick up an open-ended liability in this area? It simply was not prepared to do that. We certainly believe the package is justified but we regard it as generous in the sense of picking up a substantial part of the problems of the Bank of South Australia.

  The second issue that Senator Kernot raised was: is there legislative protection in this package to protect the current employees' entitlements in the superannuation area? She wanted this included in the legislation. We regard this as a matter that had to be dealt with by the South Australian government in the South Australian government legislation. I understand that there have been very substantial negotiations—I do not have the details of the negotiations—in South Australia, and that this is reflected in the final agreement in the package of South Australian legislation. I do not have those details with me. That package, as Senator Kernot pointed out, was supported by the Democrats reluctantly.

  We do not view it as proper, an agreement having been reached, for the Commonwealth to come in over the top of that and attempt to rewrite something in the superannuation area. We do not believe that is proper, the parties having thrashed it out locally; and, with respect to Senator Kernot, we do not believe that it is proper for the Democrats, having been involved at the state level and having supported the legislation, albeit reluctantly, to then try that here. It may be politic, but we do not believe it is proper.

  That is my response in those two areas. I do not wish to add any further comments, except to thank the opposition parties and the Democrats—I do not know the Greens' position—for their support on this legislation.

  Question resolved in the affirmative.

  Bill read a second time.

  The bill.