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Wednesday, 25 November 1959

Mr CALWELL (Melbourne) .- On behalf of the Opposition, and, I hope, of many members of the Government parties as well, I desire to record a most emphatic protest against the contemptuous attitude of the Government for the Parliament in the way this important piece of legislation has been introduced and is being forced through both Houses of the Parliament within a little more than 60 hours. The bill has 69 clauses, covering 29 pages, and the schedules cover another 29 pages. The Treasurer (Mr. Harold Holt) has tried to brazen his way through all objections and protests at the cavalier attitude that he and his colleagues have adopted in rushing this legislation through without the slightest opportunity being given to any member of the Parliament to consult the Public Service associations affected - these will doubtless want to be heard on the matter - and without members of this House or of another place having time to give more than a cursory glance at the issues covered by the bill. The Treasurer disclaims any responsibility. He says that the parliamentary draftsmen found it very difficult to draft the bill.

Mr Duthie - The poor old draftsmen; they get blamed every time!

Mr CALWELL - I accept that very sapient remark by way of interjection from my honorable friend from Wilmot. I have no doubt that the parliamentary draftsmen found it difficult to draft this legislation, and indeed to draft any legislation for this Government. I am sure that these learned gentlemen could draft any measures in reasonable time, provided the Government knew what it wanted them to do and could make up its mind to issue clear and coherent directives. Blaming the parliamentary draftsmen for the Government's failure to bring down this legislation with other bills arising from the Budget immediately after the Budget was presented some months ago, is in much the same category as the actions of other people who put the blame for their mistakes on to typistes' errors. Neither excuse has any real validity. The Government could have got the job done if it had taken the time and trouble to make up its mind. In being asked to rush this legislation through, we are asked to do something which is a negation of democracy and something that is not appreciated by the persons affected by the legislation.

In the long years that many of us sitting in the Opposition to-day have sat in this Parliament, we have never before witnessed such a disgraceful exhibition of indecent haste by a power-drunk government such as we have seen and have had to endure with regard to this bill for an act relating to superannuation which, when it becomes law, will be cited as the Superannuation Act 1959.

I move the following amendment to the bill:-

That, all words after " That " be omitted with a view to inserting the following words in place thereof: - " the bill be withdrawn and redrafted because it fails to make provision for an increase in the value of the unit of pension and because it fails to come into operation from 1st July, 1959 ".

The bill, as I have said, is a big one. It recites the history of the superannuation fund, and I should like to add my few remarks about the history of the fund to what the Treasurer said when he brought down the bill. The first Superannuation Act was passed in 1922. I do not know whether that was in the days of the Hughes Government or the Bruce-Page Government.

Sir Earle Page - The Hughes Government.

Mr CALWELL - Yes, the Hughes Government. Since that time, there have been 21 amending bills directly affecting the act, and three other pieces of legislation have affected it in certain respects. As the Treasurer said, the bill, when it was introduced almost 40 years ago, provided a contributory scheme of retirement benefits for government employees and their dependants. Originally, as the right honorable gentleman remarked, the act provided pension benefits only, which were payable on the retirement of the contributor on reaching the maximum age, or his prior invalidity or death. The amount set down as a contribution to be paid by the employee as from 20th November, 1922, when the Commonwealth Superannuation Fund was established, was 5s. per unit per week. The amount paid by the Commonwealth was 5s. per unit per week and the total value of each unit was, therefore, 10s. a week. Not until 1947 - a lapse of 25 years - were the positions of the employee and the Commonwealth altered in regard to the contributions they made to the fund. To-day, instead of the Commonwealth paying seven-fourteenths of each unit that a pensioner draws, it nays ten-fourteenths. The amount of contribution by the Commonwealth has been increased from sevenfourteenths to ten-fourteenths. To-day, the employee, who once paid seven-fourteenths, pays four-fourteenths.

It may be interesting to honorable members to know, so that it will be included in the record for future reference, that there have been three increases in the value paid by the Commonwealth for pension units per week and that the total amount of each unit has risen from 10s. in 1922 to 17s. 6d. to-day. It may also be of interest to honorable members to know that the maximum number of pension units available has been varied over the years. In 1922, the maximum number of units was sixteen. In 1947, the number had increased to 26, and in 1954 the number had been further increased to 36. Under this bill it is proposed to increase the number still further to 54. If inflation continues to depreciate the value of our money at the rate of 7 per cent, annually - that is what some economists say is happening - the maximum number of units will need to be further increased by eighteen each succeeding five years; and every time the Government brings down a measure of this kind it will strike trouble with the great majority of public servants and will meet with opposition from those who believe that any benefits to be given should be given to as many as possible and not to as few as possible. When I say that every five years the maximum number of units will need to be increased, I do not for a moment envisage that this Government will be in existence five years, ten years or fifteen years hence. But assuming the worst - that the people of Australia will not see the light and return a government that will do something worth while for them - this tendency of increasing the number of units will continue.

The original scheme provided for a definite number of units - sixteen units - but the whole thing has got out of focus, as it were, since then and the government of which I was a member made the first move to increase the maximum number of units back in 1947. The increase at that time was ten units. There were people in those days who thought we were acting wrongly, but whatever the government of the day did, it was supported by all its members. I am not saying that I did not agree with what was done, but I remember a good deal of the criticism that occurred at the time. Some of that criticism can be directed at this particular measure. So few people in the whole of the Public Service will receive any benefit from this legislation. There are about 100,000 people in the Commonwealth Public Service entitled to benefits from the superannuation fund. About one-half of the 30,000 people in the first, second and third divisions of the Service will benefit from the legislation, but the other 15,000 people in those divisions will not benefit additionally to the present pension entitlement of 70 per cent, of their salaries on retirement. The reason why these people will not benefit is because the benefit is designed for those in receipt of £1,300 a year or more. There are 49,000 people in the Fourth Division of the Commonwealth Public Service but only 3,000 of them are in receipt of £1,300 a year or more, and therefore only those 3,000 will benefit.

Mr Harold Holt - Have the others no hope of promotion?

Mr CALWELL - Well, there does not seem to be much hope for them. If only 3,000 out of 49,000 will benefit, there could not be too many of the remaining 46,000 who will benefit ultimately, because the number of positions carrying a salary of more than £1,300 a year is not so very large even in the Commonwealth Public Service. The Treasurer believes that the other 46,000 people in this particular division are already provided for adequately and so he does nothing for them in this legislation. There are 15,000 females contributing to this fund, but they will not benefit additionally either. So we get down to the position where only a small proportion of the present contributors to the fund will get any benefit at all.

Mr Harold Holt - Are the more senior and responsible members of the Commonwealth Public Service not entitled to justice?

Mr CALWELL - I accept that portion of the Treasurer's observations relating to the more senior and responsible officers of the Commonwealth Public Service. They will receive the benefit that this bill proposes to give them. Now he asks, " Are they not entitled to justice? " They are entitled to justice, but so are all the other people who will not get justice because they will not be able to take out these additional units to the same extent as will the people on the higher salaries. This legislation provides that eighteen additional units may be taken out. A person receiving £1,300 a year will be able to take out only one additional unit, but persons on the higher range of income will be able to take out the eighteen units.

Sir Earle Page - But they will pay for them, will they not?

Mr CALWELL - Yes, but they are in a position to pay for them. The other people would pay for them, too, if they received the salary to enable them to do so. The original scheme of superannuation has been slanted in such a way that under this bill some people will retire on a pension of £2,400 a year, which is not too bad at all, particularly as the Commonwealth will pay five-sevenths of it and the contributor will pay the remaining two-sevenths. If we are to do justice in this way to the public servants in the higher grades, what about doing a little more justice to age, invalid and widow pensioners? They have been asked to accept an increase of 7s. 6d. a week and have been told that they are getting justice. Both the Minister for Social Services (Mr. Roberton) and the Minister for Labour and National Service (Mr. McMahon) have stated that the pensioner to-day is better off than he was ten yearsago. If the pensioner cannot be given a greater increase in his pension, how doesthe Government justify its claim that the top ranks of public servants are not adequately provided for by superannuation?

Let me deal now with the public servantswho have retired - those whose working days are over but who, during their working days, contributed to the fund. They will receive no additional benefits under this bill. The value of their units will not be increased retrospectively. There are 8,318: male beneficiaries of the fund, and not one of them will receive one penny under this bill. Of the female public servants whohave retired, 957 will receive no benefit. However, widows of public servants will' have their pension increased from one-half, or four-eighths, of their husband's salary while he was alive to five-eighths of that salary. That is a magnificent increase!

Mr Harold Holt - It is a 25 per cent, increase.

Mr CALWELL - That magnificent increase does not compare in any way with the increases that will flow to public servants on the higher salary ranges who will retire in a year or two. The Treasurer has said, in effect, "Why not make it sound better and say that the widows will receive a 25 per cent, increase? " But I remind honorable members that it is the value of the increase and not the percentage rate that matters.

Mr Anderson - Do not forget that public servants earning £2,400 a year pay income tax.

Mr CALWELL - Of course they do, as do people earning £20 a week and people earning a little over the basic wage. I do not know that the tax contribution on £2,400 a year is particularly heavy when you consider what people earning that amount in other countries pay in income tax. The Government proposes also that upon the death in retirement of a public servant his widow will receive this 25 per cent, increase in pension. The Treasurer hopes that this gesture of goodwill will afford some encouragement to retired public servants to believe that the Government thinks kindly of them and wishes them well. It almost seems as if the Treasurer believes that he is playing Father Christmas in 1959 to the forgotten people - forgotten by this Government - who once were public servants, and many of whom received comparatively low salaries.

We do not oppose the benefits that will be given to the widows. In fact, these benefits are the main reason why we do not oppose the second reading of the bill. We have adopted the other course of making our protest in the form of an amendment to the motion for the second reading and, if that amendment is not accepted, we shall not vote against the second reading of the measure.

In his narrative of events the Treasurer told us of the various small increases that were granted between 1922 and 1954. I suppose it could be said truthfully that because of inflation the Government feels compelled to do something about this problem. This legislation is not the result of the seventh quinquennial investigation of the fund which showed a surplus in the fund, part of which, I think, is being used to meet the cost of the proposed increases. The Government is responsible for this legislation and would have introduced it whether or not there had been a seventh quinquennial investigation. To use the Treasurer's own words -

The principal purpose of this bill & to provide a new table of pension entitlement for contributors to the superannuation fund. The proposals are designed to restore the basis of pension entitlement adopted by the Government in the 1954 legislation when it was decided that the pension entitlement of officers on lower and middle salary ranges should be stabilized at 70 per cent, of salary, of which the Commonwealth would meet an amount equal to 50 per cent of salary, and that for those on higher salaries the proportion of pension to salary should reduce to a limit which, in relation to the scale of pension units, was 40.9 per cent, of the salary for those whose salary was £4,000 per annum.

Therefore, in 1954 the Government established a standard of superannuation rights for persons receiving over £4,000 a year. It said, " Those people are entitled to approximately 41 per cent, of their salary on retirement ". Now the Government has said, " We wish to alter that situation and place public servants who receive such salaries on a higher limit, but we want to bring about the same position as obtained in 1954 for those on the lower and middle class salaries ". Why is the Government so concerned about the people on the higher salaries as to discriminate in this way in their favour? The people who receive high salaries can, to a large extent, make their own provision for their retirement by purchasing annuities and by taking out life insurance policies. But the Government has said, "We shall do better than that. We shall allow you to retire on 70 per cent, of your salary and we shall pay five-sevenths of the cost of your pension ". The Opposition wants a better explanation than that afforded by the Government as to why it has introduced this proposal and has not done something for people who receive £1,300 a year and less.

We have proposed that the bill be withdrawn and amended so that the value of all units can be increased, thereby allowing all contributors to the fund to become beneficiaries under this legislation. So that honorable members will understand what the Treasurer was driving at, I shall quote his remarks verbatim. He went on to say -

It is proposed to restore the 1954 position by applying the principles laid down at that time to present-day salaries. This results in an increase in the scale of units of pension from 36 to 54 providing a new maximum pension of £2,457 per annum, representing 40.9 per cent of a salary of £6,000 per annum, which is the salary payable to officers who in 1954 received £4,000 per annum.

An adjustment is also proposed in the salary level up to which the maximum percentage of pension entitlement to salary - 70 per cent. - is available, so that additional units of pension will be available to all existing contributors whose salaries exceed £1,365 per annum. The pension value of each unit will remain unchanged.

I repeat what I have already said: A person on £1,300 a year will be able to take up only one additional unit, and not the whole eighteen additional units. The maximum of eighteen additional units can be taken up only by those on the highest salaries. To us, that is obnoxious.

The Minister went on to say that not only will there be no alteration in the value of each unit, but also there will be :no alteration to the present basis of financing pensions. The right honorable gentleman then went on to cover a number of points which are not of very great consequence. In the process, he used a wonderful phrase to which I shall refer later and which I defy him or whoever wrote it to interpret to the satisfaction of ordinary people. Speaking of the Provident Account, he said - . . there is provision in the Superannuation Act 1922-1958 for contributions to a provident account providing lump sum benefits. The contributions of employees are accumulated at interest and supplemented by the Commonwealth.

I think that the rate of supplementation is ls. in the £1 of salary. One-twentieth of a person's wage is paid into a fund; so that a person in receipt of a salary of £2,000 a year would pay £100 a year. "Those contributions are accumulated and they earn interest. In the end, the person on whose behalf they are made receives a lump sum payment. Such a payment is very small indeed in comparison with superannuation benefits. The Minister explained that the rate of interest at which contributions are accumulated is to be increased from 3 per cent, to 31 per cent, per annum, and then he used the language which, as I have remarked, defies interpretation. He said -

This will increase the ultimate benefit to con.tributors to the Provident Account by three times the increase resulting from the higher rate of interest as the lump sum payable from the Provident Account is equal to three times the amount of contributions paid by the contributor plus interest thereon.

Then, trying to make it somewhat clearer, he said -

Of this amount the Commonwealth contributes two-thirds.

The problem is to find what one-third represents. If one can ascertain that, one will know how much the person contributing to the Provident Account will receive.

Again I say that the good feature of the bill is the provisions in regard to widows. One of these provisions will enable married women whose husbands are incurably insane to become contributors to the Superannuation Fund. The Treasurer pointed out that widows may also contribute to the fund and indicated that the Government had decided that married women whose husbands have been placed in mental asylums also should be allowed to contribute on a similar basis.

A further provision relates to widows receiving a pension under the act who become permanent employees of the Commonwealth and therefore become entitled to contribute for a pension under the act in their own right. At present, such a person loses the whole of the Commonwealth share of her pension on becoming an employee of the Commonwealth. A male pensioner who is re-employed by the Commonwealth has his pension reduced to £500 10s. per annum, or half of the pension, whichever is the greater, and it is proposed that a comparable restriction be applied to widows who become employees of the Commonwealth.

As I have said, Sir, the bill has a few good features. But it is wrongly based. The Government is trying to look after those persons whose salaries at one time were £4,000 and are now £6,000, and others on big salaries. Those salaries have had to be increased, not because of increasing responsibilities, but because of the inflation which the Government cannot control. The Government now proposes to look after those people specially. We on this side of the House think that a lot of other people ought to be looked after, too. I know that a number of the Public Service associations are very much concerned and disturbed at the Government's action in rushing this measure through without giving any of them an opportunity to study it or to come to the Treasurer and suggest amendments. I have already received communications from some of these organizations. They would like an assurance from the Treasurer that, during the coming Parliamentary recess, he will give them an opportunity to discuss with him or his officers the changes now being made in the superannuation scheme, and hear from them representations on amendments which they may have to suggest. I am not necessarily supporting anything that they will put forward. I do not know to what extent the value of each unit should be increased, and I cannot stipulate any amount. I know the financial cost involved, for one thing, and I know that other anomalies may be created if we settle on a certain sum instead of another.

Some of the Public Service organizations have made a complaint, and I put it forward without necessarily endorsing it, that single men will not opt to become contributors for increased benefits for widows and dependants at higher rates of contribution, and that they will pay the lower contributions. At present, all contributors on similar salaries pay similar amounts for equal benefits, although the single man, owing to the lack of dependants, cannot obtain all the benefits. In the view of some of these Public Service organizations, the proposed change in this respect needs further consideration.

The bill contains a provision under which officers who become contributors at more than 40 years of age will not be allowed to take up the full number of units of pension in future. The representatives of the Public Service organizations say that officers who are admitted as contributors to the Superannuation Fund after they reach the age of 40 will in future be forced to accept a lower pension than will be received by those who become contributors to the fund at an earlier age, even though the same salary has been attained in each case. At the present time, a person over 40, whose rate of contributions for each unit is high, can elect not to take up the units to which his salary entitles him. The association representatives understand that this freedom to choose is to be discontinued.

I ask the Treasurer to consider fully and carefully any representations which he may receive now or in the future concerning the operation of the proposed changes in the superannuation scheme, and, indeed, to repeat the assurance which he gave last evening when explaining another measure that, if any members of the Parliament find certain provisions to be harsh or burdensome, he will provide an opportunity during the coming parliamentary recess or afterwards, for the matters concerned to be reconsidered. Such an assurance is all to the good.

Again, I deplore the great speed with which the Government has brought this legislation down. The failure of the Government to do anything other than protect those on the higher salaries, the failure of the Government to provide for easier admission to the fund of temporary employees, and the maintenance of the provision that retired persons shall accept a reduction in their pensions if they are re-employed in the Commonwealth Public Service are unsatisfactory features of this legislation. I suggest that retired persons who are re-employed should be entitled to receive their full benefits.

I think that greater provision should be made than has been made for widows and children. In fact, it looks as though not much consideration is being given to children at all and very little to widows. All the benefits are being concentrated upon those people who, to-day, are in receipt of big salaries. People who occupied those positions previously and who have been living on the smaller pensions to which they were then entitled, are not to have any increase provided in their pension rates, even though those who have succeeded them, in some instances, are not carrying the same degree of responsibility that those persons had to carry. In saying that, I am thinking of the responsibility which the top public servants of the day carried during the war.

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