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Friday, 5 October 1984
Page: 1332

Senator MESSNER —My question is addressed to the Minister representing the Treasurer. Has he noted the recent action of the New South Wales Government in offering lump sums to its employees who are members of the State superannuation scheme in order to reduce the future cost of its present pension scheme? Does this fly in the face of the Federal Government's lump sum superannuation tax whose objective is to force people to accept periodical payments rather than lump sums upon retirement? Will not this muddle cause the employees now taking a lump sum to lose up to 30 per cent of their future benefit, and thus cause them to become more heavily dependent upon the age pension in the future, with the obvious end result of causing higher levels of dependency in the future and hence more cost to the taxpayer?

Senator WALSH —It is debatable whether superannuation is a finance or a taxation matter, but the superannuation scheme is, I think, an administrative responsibility of the Minister for Finance. Senator Messner said that the objective of the Commonwealth in imposing a higher level of taxation on lump sum payments was to force people to take out pensions in lieu of lump sum payments. They are not forced to do that, of course. People have the option of rolling over a lump sum entitlement into a periodic payment or of paying the rate of tax applicable to whatever lump sum there might be.

Senator Messner asked whether the action of the New South Wales Government flew in the face of Commonwealth action, or words to that effect. As I understand it the New South Wales Government took the action it did because, being a responsible Australian Labor Party Government-as distinct from typically irresponsible government of other persuasions-it was very concerned at the fact that there was a very large unfunded liability under the State superannuation scheme which would increase very substantially in the succeeding decades. The New South Wales Government made the choice that it was going to reduce that unfunded liability by making a change. Now people may approve or disapprove of the change that was made, but I do not believe it is my place to sit in judgment over the New South Wales Government as to whether it should have made the particular type of change that it did. But it is fair to observe the reasons why a change was made. It was that the New South Wales Government had decided that it would be irresponsible to allow a scheme to continue in operation indefinitely which was accumulating a growing unfunded liablity, thereby imposing very great difficulties upon governments in the future.

Senator Messner, if he is critical of that, is I presume advocating the sorts of policies which the Government of which he was a member applied throughout most of its term in office, and that was short term thinking with no regard at all for the future financial problems which would be faced by governments. The fiscal irresponsibility ultimately culminated in the inheritance passed on to this Government-that was an impending deficit for the 1983-84 financial year on a no policy change basis of almost $10 billion. That was the end product of the fiscal irresponsibility of the Fraser Government, the type of fiscal irresponsibility which I judge from the tone of Senator Messner's question and comments this afternoon he would have a non-Labor Government pursue or resurrect if that non-Labor Government should ever be elected.

Senator MESSNER —Mr Deputy President, I ask a supplementary question. Will the Minister confirm that he intends to cut back the $10 billion unfunded amount on the Commonwealth superannuation scheme by employing the same instruments as the New South Wales Government?

Senator WALSH —I passed no judgment, and I explicitly said so, on the decision which the New South Wales Government has made. I believe that is a decision for the State Government to make and it is an area of responsibility entirely within its domain and it acted accordingly.