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Friday, 19 April 1985
Page: 1270


Senator KILGARIFF(3.03) —As the Senate is now to adjourn to present the Address-in-Reply to the Governor-General, I seek leave to have incorporated in Hansard various papers relating to the Northern Territory Public Service superannuation scheme.

Leave granted.

The documents read as follows-

LEGISLATIVE ASSEMBLY MINISTERIAL STATEMENT HON. I. TUXWORTH

Mr Speaker, I seek leave to make a statement on the subject of Public Service Superannuation.

At Self-Government Northern Territory Public servants were eligible to contribute to the Commonwealth Superannuation Scheme (CSS). This eligibility was also extended to new appointees. Apart from a small number of Statutory Authorities personnel, all permanent public servants have been compulsory contributors to the Scheme.

Honourable members will recall that at that time, the financial arrangements between the Commonwealth and the Territory did not provide the necessary financial capacity for the Territory to meet its employer superannuation liability.

It was agreed in the Memorandum of Understanding that the matter of superannuation, and in particular our capacity to pay, should be considered by a Joint Commonwealth/NT Task Group.

Prior to the Task Group's recommendations. The NT Government undertook to implement a NT Superannuation Scheme. We proposed a scheme and embodied this in the Superannuation Bill 1982. However, the Commonwealth failed to pass the complementary legislation necessary for this to proceed. This was due to union reluctance to support the proposed scheme on the basis of it being guaranteed by the Territory and not the Commonwealth. I must say also that apart from some minor disagreements over matters of detail the Commonwealth had to date been supportive of these objectives and aims.

The Task Group considered the matter and reported in June 1984. The Commonwealth and the Territory agreed to the recommendations of the Task Group on 25 October 1984. In summary it was agreed that:

The Commonwealth would make annual payments to the NT to allow the Territory to fund the employer financed benefits of the CSS on an emerging cost basis.

The payment would be in respect of benefits that became payable on or after 1 July 1984 to Territory employees in respect of whom the Territory had not to that date been provided with the financial capacity.

The arrangements were so designed to permit the NT Government to facilitate the introduction of an NT Scheme.

Mr Speaker, I put it to the Assembly that the NT Government has pursued a course of supporting all arrangements made with the Commonwealth to provide comprehensive superannuation cover for our employees.

Mr Speaker, I must now report that the Commonwealth have decided, without any prior consultation and without any notice, to walk away from these arrangements. This means either no Superannuation Scheme for our public servants or our accepting a continuing contingent liability estimated to be $50m per year.

This estimate is based on actuarial advice that the cost of the Commonwealth Scheme as it relates to Territory employees is of the order of 17% of salary annually.

I now table the letter from the Commonwealth containing their decision and my response.

Honourable members will appreciate the substantial impact of the Commonwealth's unilateral action. The NT Government has not and has never had the capacity to fund any Superannuation Scheme for the Public Service. The Commonwealth's decision will inevitably lead to morale problems in the Public Service unless other arrangements can be made.

Mr Speaker, as you can imagine the Northern Territory Government regards this total abrogation of the Commonwealth's responsibility as witnessed by the signature of the Prime Minister of Australia and the Chief Minister of the Northern Territory, as the most abominable conduct of a government conceivable.

Mr Speaker, it is not only a matter of betrayal of that memorandum of understanding, but a betrayal of an understanding entered into in good faith by thousands of Northern Territory public servants upon their compulsory transfer to the Public Service of the Northern Territory.

Not only Mr Speaker was it an understanding of those officers of the then Australian Public Service it was also an arrangement enshrined in the law of this country by way of amendment of the Commonwealth Public Service Act.

A similar provision you will recall Mr Speaker was incorporated by way of mirror legislation in our Public Service Act.

What I refer to Mr Speaker, is of course an undertaking verbally, in writing and by statute guaranteeing that no officer of the then Australian Public Service transferred compulsorily to this service would have their terms and conditions of employment eroded.

So we see Mr Speaker, not only a breach of the memorandum of understanding, and I repeat, an understanding witnessed by the signature of the Prime Minister and the Chief Minister, but a breach unilaterally of the clear expressions and intention of the laws of this country.

Notwithstanding the note of finality in Senator Walsh's letter we will do everything we can to have this decision reversed.

I will keep the assembly and unions informed of developments.

I commend this statement to the House.

MINISTER FOR FINANCE

Parliament House Canberra, A.C.T. 2600

4 April 1985 The Hon. I. L. Tuxworth, M.L.A.Chief Minister for the Northern TerritoryP.O. Box 3721 Darwin, N.T. 5794

My dear Chief Minister

I refer to my predecessor's letter of 25 October 1984 about the arrangements under which the Territory would meet the employer liability for benefits payable to its employees under the Commonwealth Superannuation Scheme and to your reply of 21 November 1984.

I have reviewed these arrangements and have concluded that they should be varied significantly.

Under the revised arrangements that I have agreed with the Prime Minister the Territory will be required to meet a portion of the emerging cost of employer-financed benefits payable to its employees who retired, or retire, on or after 1 July 1984. The Territory is to meet that part of the liability that relates to the person's employment with the Territory on or after that date. The Territory would not, however, be required to meet any liability in respect of an employee who retired before that date. That liability would continue to be met by the Commonwealth.

Also, the Territory will be required to fund the employer superannuation contributions from its own resources. That is, no additional financial assistance will be provided by the Commonwealth to the Territory for that purpose.

Should the Territory decide not to pay the employer superannuation contributions, action will be taken to terminate membership of Territory employees in the Commonwealth Scheme. In that event, and should you so desire, I would be prepared to consider arranging for the preservation of the accrued entitlements of employees affected.

Yours sincerely PETER WALSH

Chief Minister Darwin

18 April 1985

The Hon. R. J. L. Hawke, A.C., M.P.,Prime MinisterParliament HouseCanberra, A.C.T. 2600

My dear Prime Minister,

I refer to the letter from the Minister for Finance dated 4 April 1985 dealing with superannuation arrangements for the Northern Territory from 1 July 1984.

In his letter Senator Walsh informed me that the Northern Territory is required to meet that part of the superannuation liability that relates to an officer's employment with the Territory from that date without Commonwealth financial assistance.

Senator Walsh's action sets aside the agreement reached in an exchange of letters between the former Minister for Finance and myself in 1984. It is in conflict with the Memorandum of Understanding between our Governments. I believe the issues have not been thought through and that the decision is a serious mistake. I wish to protest in the strongest possible terms at the timing and effect of this precipitate and unilateral action by your Government.

Before commenting on the implications of Senator Walsh's letter I feel that it is necessary to recapitulate on events preceding the agreement on 25 October 1984 entered into by Mr Dawkins.

I turn first to the Memorandum of Understanding in Respect of Financial Arrangements Between the Commonwealth and a Self Governing Northern Territory. Under that Agreement, Northern Territory public servants are to be eligible to contribute, or continue to contribute, to the Commonwealth Superannuation Scheme. No financial capacity was provided to the Territory to enable it to meet employer superannuation liabilities for the mainstream of employees, now numbering more than 12,000. However, a study by a joint Commonwealth/ Northern Territory task group, including actuaries, who were to report to Ministers on future arrangements was foreshadowed. In the meantime, the Commonwealth met the emerging cost of superannuation benefits.

That study was carried out and the arrangements proposed by the task group were agreed to by Mr Dawkins (on behalf of the Commonwealth) on 25 October 1984. Those arrangements include a formula to calculate the specific purpose grant from the Commonwealth to the Territory each year pursuant to the Territory's agreement to meet the emerging cost of the superannuation liabilities coming into being from 1 July 1984.

On the basis of actuarial advice, the abrogation by your government of that agreement exposes the Northern Territory to an immediate and unfunded actual cost and liability of about $50m per annum. Funding of superannuation payments on an emerging cost basis would in the short term defer the level of cash payments, but would involve very much higher payments in the longer term.

Given the magnitude of these liabilities, the Territory is simply unable to meet the terms now dictated for membership by its employees in the Commonwealth scheme. The emerging cost of employer contributions related to such membership would progressively erode our capacity to discharge the responsibility to provide the basic range and quality of government services throughout the Territory. This would be negligent in the extreme.

The fundamental protection afforded the Territory, via guaranteed access to the Commonwealth Grants Commission under clause 29 of the Memorandum of Understanding, when financial needs are unsatisfied in any year is effectively repudiated in Senator Walsh's statement that no additional assistance will be provided by the Commonwealth to fund this cost. Such repudiation goes to the very heart of the Territory's financial arrangements and cannot be accepted. It also has significant implications for the States and the Grants Commission.

I should also point out that there are still many compulsory transferees from the Commonwealth Public Service in the Northern Territory Public Service. It is most unlikely that the Territory and the Commonwealth have the power to terminate those officers' membership of the Commonwealth Superannuation Scheme without some Commonwealth legislative or other action. It is therefore quite unreasonable to suggest that the Territory shall meet the cost of superannuation benefits for such officers without an agreement covering appropriate Commonwealth financial assistance.

In view of the obvious severe implications which this decision has for the continued viability of effective self-government in the Northern Territory, I urge you to reconsider this matter and to reinstate the specific financial capacity already agreed.

As I have indicated to you previously, the Northern Territory is happy to discuss any aspect of the existing financial arrangements between our two Governments which you consider to be in need of review. Any changes, however, should be based on agreement between our two Governments.

Because of the serious implications of Senator Walsh's letter on the Territory's finances and on public service industrial harmony, I would like to discuss this matter with you as a matter of urgency.

Yours sincerely Ian Tuxworth

MINISTER FOR FINANCE

Parliament House Canberra, ACT 2600

The Hon. I. L. Tuxworth, M.L.A.

Chief Minister for the Northern Territory

PO Box 3721

Darwin, NT 5794

Dear Chief Minister

I have received the Report of the Joint Task Group on Northern Territory Superannuation concerning the arrangements under which the Territory would meet the employer liability for benefits payable to the employees under the Commonwealth Superannuation Scheme.

I agree with the arrangement proposed by the Task Group as summarised in the attachments to this letter and that they should operate from 1 July 1984.

If you agree, I suggest that our officers put them in place as soon as practicable.

Yours sincerely J. S. DAWKINS

25 October 1984

21 November 1984 The Hon. J. S. Dawkins, MP

Minister for Finance

Parliament House

Canberra, ACT 2600

Dear Minister

I have received your letter of 26th October concerning the arrangements under which the Territory would meet the employer liability for benefits payable to Territory Government employees under the Commonwealth Superannuation Scheme.

I agree with the arrangements and the operative date of 1 July 1984 as proposed by the Task Group and have directed my officers to put them in place as soon as practicable.

Yours sincerely IAN TUXWORTH

To the Prime Minister

To the Minister representing the Prime Minister, Senator Button

In a recent letter to the Northern Territory Government the Minister for Finance broke a written agreement with the Northern Territory Government and advised the Northern Territory it would not be meeting its employer contributions for superannuitants in the Northern Territory Government who are members of the Commonwealth Superannuation Scheme and I ask:

Did the Minister for Finance consult with the Prime Minister on this matter?

If he did, does the Prime Minister endorse the actions of the Minister for Finance?

Does the Prime Minister know that the letter sets aside a written agreement between the then Minister for Finance, Mr Dawkins, and the Chief Minister of the Northern Territory signed on behalf of their respective Governments in October 1984?

Does the Prime Minister know that the letter also cuts across the terms and conditions of the memorandum of understanding regarding superannuation for transferred employees to the Northern Territory Public Service?

Could the Prime Minister advise how these employees with entrenched rights and access to the Commonwealth Superannuation Fund and who are still members of the Commonwealth Public Service will be covered by the Minister's refusal to honour the Commonwealth's obligations?