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Tuesday, 11 May 2010
Page: 3163

Mr Windsor asked the Minister for Finance and Deregulation, in writing, on 23 February 2010:

What measures will he take, and when, to address the ongoing concerns within the veteran community that (a) the indexation of military superannuation pensions against the Consumer Price Index is not an accurate measure of the cost of living, and (b) inequality exists between the indexing of military superannuation pensions and other pensions such as age and welfare; and will he consider introducing a fairer indexation method for military superannuation pensions in line with that used to calculate age and welfare pensions.

Mr Tanner (Minister for Finance and Deregulation) —The answer to the honourable member’s question is as follows:

(a)   The Government recognises the concerns expressed by the veteran community regarding the indexation of military superannuation pensions. In acknowledgement of these concerns the Government commissioned an independent expert review—the Review of Pension Indexation Arrangements in Australian Government Civilian and Military Superannuation Schemes, conducted by Mr Trevor Matthews. The review considered whether the current Consumer Price Index (CPI) indexation methodology for pensions for Australian Government civilian and military defined benefit superannuation schemes should be changed. The report of the review, released on 21 August 2009, recommended no change to the indexation arrangements. Mr Matthews recommended that pensions from the Australian Government civilian and military superannuation schemes continue to be indexed by the CPI as it is the most suitable index to protect pensions against inflationary price increases. The Government fully supports the findings and recommendations of the report.

(b)   Mr Matthews did not consider it inequitable or unfair that civilian and military superannuation pensions are increased on a different basis to the Age or Service Pensions. He considered that they are different benefits provided for different purposes and therefore can be increased on a different basis. That is, Mr Matthews is drawing a distinction between the obligation of the State to provide an income support safety net to its more disadvantaged citizens and the obligation of the State (as an employer) to provide superannuation to its employees and former employees. Mr Matthews considered that the CPI should be retained as the basis for indexation of civilian and military superannuation pensions, unless a better measure of changes in the cost of living for superannuants becomes available.