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Monday, 25 November 1996
Page: 5907

Senator SHERRY (Deputy Leader of the Opposition in the Senate)(4.12 p.m.) —Labor will support Senator Kernot's motion No. 275 in respect of judges' and parliamentarians' superannuation. Labor will not support the reference of public servants vis-a-vis the National Commission of Audit. When I say `public servants' I am also talking about military personnel. Both the military and the general Public Service have two different superannuation funds with two different levels of entitlement. I would like to incorporate a letter from the Prime Minister to every Commonwealth public servant before the last election. I will come to that in a moment.

Firstly, Labor does believe it is appropriate that politicians' and judges' superannuation is reviewed. The appropriate committee to do that is the Senate Select Committee on Superannuation. It is the appropriate committee because, as Senator Kemp has pointed out, it is a committee that does not enjoy a government majority. It is a committee with a solid reputation for work. It is currently chaired by my highly esteemed colleague, Senator Watson, from Tasmania.

Just in passing, I do hope, Senator Kemp, that we see the government's legislation in respect of a range of other superannuation matters, as was undertaken by your predecessor, before the end of this year for reference to the Senate committee on superannuation. That is another set of issues. I hope that commitment is maintained. This is the appropriate committee to deal with superannuation issues that come before the Senate.

It is time to look at politicians' superannuation. There are a range of reasons. There is no doubt that the nature of work of politicians has changed. The nature of our average life expectancy as politicians has changed. There have been reviews of politicians' superannuation in other parts of the country. Certainly Labor does not shy away from, we are not afraid of and we are not concerned about, a thorough public examination, with public hearings, of federal politicians' and judges' superannuation.

As has been noted in this debate, there is, on average, an effective contribution from budget of some 78 per cent of a federal politician's pay into their superannuation. With respect to judges—I do not think Senator Kernot mentioned the figure—it is effectively 60 per cent. Those two figures are way above the community norm and standard—not just above public sector superannuation in general, but substantially above what executives in the private sector could enjoy by way of superannuation. This is an important public issue. It should not be hidden. It should be appropriately debated and investi gated. This is the committee to carry out such an investigation.

We oppose the reference that the government has moved in respect of general Commonwealth employees. As I said earlier, this includes military personnel, who have a different scheme from other Commonwealth employees. This does make reference to the National Commission of Audit. Why do we oppose it? We oppose it because we do not trust the motives of the government—that is our No. 1 reason. I have circulated a letter from the Prime Minister, Mr Howard, which he signed on 28 February this year, just before the election. I will quote the third paragraph from this general letter to all Commonwealth public servants:

I give you my rock-solid guarantee that the coalition will not cut and destroy public sector superannuation schemes or the entitlements of existing and prospective Commonwealth government employees.

Senator Kernot —Is this a core promise?

Senator SHERRY —Is it a core promise or a non-core promise, Senator Kemp? What we have here is an attempt by the Liberal government to use the Senate Select Committee on Superannuation to attack the superannuation benefits of public servants, including the military, in this country. The government should say yes or no to the National Commission of Audit recommendations in this area. In its report on page 98 with respect to the Commonwealth Public Service, including the military—it makes some comments about the military schemes—the National Commission of Audit says, in recommendation 5.6, to which Senator Kernot has referred:

The objective of this change is to increase remuneration flexibility rather than to reduce the total value of ov

erall remuneration packages . . .

That is in respect of public sector superannuation. The Liberal government should give an assurance to every public servant in this country that it is not going to cut the overall level of remuneration of public servants, because this is what this resolution signals today. It wants to either cut their superannuation or cut their wages. The government has to say yes or no to this recommendation from the National Commission of Audit. As far as Labor stands on this issue, it says no to reducing the overall remuneration levels, including superannuation, of public servants and the military. Where does the Liberal Party stand on this issue? Yes or no? It does not need reference to a select committee for the government to state its position on this issue.

There are some other reasons. The Prime Minister gave an unequivocal commitment in writing. So why does he, presumably, want this issue of general public service superannuation to go to the select committee? It is a Liberal Party hidden agenda. The letter that the Prime Minister sent to every public servant in Australia is a non-core promise. He wants to reduce the superannuation entitlements of public servants, including the military, in this country. Labor will not have a bar of it. Labor will hold the Prime Minister to his written undertaking to every public servant and every member of the armed forces—no reduction in the overall remuneration, including superannuation, of public servants and the military in this country.

This is what this proposal is all about. You should look embarrassed, Senator Kemp. You have fallen for this instruction hook, line and sinker. Do you, Senator Kemp, on behalf of the coalition, stand by the commitment given by Mr Howard before the election, an unequivocal, rock-solid guarantee distributed to every public servant, including the military, in this country? You now want to break it.

There is another reason for opposing this. I am surprised Senator Kemp has not read the third report of the Senate Select Committee on Superannuation published in October 1992. This matter has already been before the select committee, which spent many hours examining the issue of public sector superannuation. At page 24 under `Superannuation and Unfunded Liabilities' it goes through the issue of superannuation and unfunded liabilities, including state and Commonwealth public servants, for some 10 pages. I do not think the government has read recommendation 6 with respect to this area, which says:

As the Committee has not received sufficient evidence on the matter of unfunded public superannuation liabilities, and as it does not have the resources or the time to carry out a far reaching investigation of the problem, it recommends that as a matter of urgency Commonwealth Government convene a meeting of State Finance Ministers/ Treasurers to develop a plan of action for addressing the problems posed by the unfunded public sector superannuation liabilities.

That is the other reason why we oppose this. The committee has already looked at the issue once.

Senator Kemp —You haven't read that report. Someone gave it to you.

Senator SHERRY —You should have read it, Senator Kemp. If you had a genuine interest in this area, other than wanting to cut the entitlements of public servants and the military in this country, you would have read this report. The committee looked at the area, as best it could, and it came to the conclusion that it did not have the resources to carry out such a far reaching investigation.

Senator Kemp —That is right. That's what it said.

Senator SHERRY —That is right, Senator Kemp, and that is another reason why we oppose the government's amendment. In concluding on this matter, it will send the wrong signal to public servants, including members of the armed forces—

Senator Kemp —No, it won't.

Senator SHERRY —Yes it will, Senator Kemp. You have to publicly assure public servants and members of the military in this country whether you are going to change their superannuation entitlements. Yes or no? Do you want to change them or do you not want to change them? Are you going to adopt the recommendations of the National Commission of Audit as part of the terms of reference that you want to put to this committee? Labor says no. We will examine politicians' pay—and perhaps it is time for a change in that area. I have a very open mind about that. It is time for a change in that area. Perhaps it is also time for a change for judges. The schemes are, by any standards, including the private sector, extraordinarily generous. We approach the inquiry with a very open mind on that matter.

But as far as the military and as far as the general public service goes, you should be sticking by the word of the Prime Minister— that letter that he sent to every public servant in this country, including members of the armed forces, that said that there would be no retrospective change or prospective change, that there would be no change, no reduction, in their entitlements. That is your hidden agenda. You want to attack the superannuation entitlements—

Senator Kemp interjecting

Senator SHERRY —Well, Senator Kemp, we are very happy to give you leave so that you can get up and say that you will not support any change. We have had the National Commission of Audit inquiry and the superannuation committee's third report into this matter. There are numerous other inquiries into state and federal public sector superannuation in this country. We certainly know the extent of the liabilities. We know the nature of the particular problems associated with it. We would like the government to assure us that they do not have a hidden agenda to attack public sector superannuation.

The other reason we oppose this amendment—and I will conclude with this—is that we do not trust the government. Senator Kernot has mentioned what has happened in Victoria and New South Wales.

Senator Kernot —And South Australia.

Senator SHERRY —And now South Australia, and what has been foreshadowed in Tasmania for state public servants. New employees from the date of the closing of the previous schemes ended up with just the SGC scheme, which is currently six per cent. We do not know the government's intention with respect to the co-contribution. We do not know what that is yet, and that is going to be indicated in next year's budget.

We could well have a situation develop where public servants, if their scheme is cut, as the government intends to reduce their superannuation, will be on the SGC scheme—which will be nine per cent by the year 2000-2001—without a rock solid guarantee, even though the government gave it before the last election, to the government co-contribution as well. That is what we could end up with. That would certainly be a massive breach of the commitments given by the coalition at the last election. Your general approach on superannuation worries us, Senator Kemp. You want to introduce a new tax, new administrative costs—

Senator Kemp —Which you support.

Senator SHERRY —We support it, yes, we do—the surcharge, the famous surcharge. You want to introduce all these new costs on superannuation. We have another issue with the over 55 superannuation. So your approach on superannuation does worry us, Senator Kemp—the undermining of the system, the loss of faith in the system, the growing public concern about superannuation, the question mark over the government co-contribution and the question mark over the superannuation of public servants, including people in the military.

This approach does worry us even though we have in writing assurances from the Prime Minister. Where do these written assurances stand? They are more non-core promises to be disposed of like the public servants who are being made redundant. You get rid of the public servants and you get rid of their superannuation. Labor will not have a bar of that. Labor will not have a bar of these reductions given the Prime Minister's commitment to the entitlements of members of the military and the general public service in respect of their superannuation.