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Monday, 22 April 1985
Page: 1278

Senator PETER RAE —I direct my question to the Minister for Finance. Whilst acknowledging the need to review the whole Commonwealth superannuation scheme, I refer in particular to the Minister's letter of 4 April last to the Chief Minister of the Northern Territory Government in which he advised that the Commonwealth has unilaterally decided that it will not be meeting its agreed employer contributions to superannuitants in the Northern Territory Government who are members of the Commonwealth superannuation scheme, and that this is retrospective to 1 July 1984. Does the Minister agree that the letter is a flagrant breach and repudiation of the written agreement between his predecessor and the then Chief Minister of the Northern Territory, signed by them on behalf of their retrospective governments in October last year? Does the Minister agree that the letter also cuts across the terms and conditions of the memorandum of understanding regarding superannuation for employees who transferred to the Northern Territory Public Service? Will the Minister advise how these employees, with established entitlements under the Commonwealth superannuation fund, will be affected by his refusal to honour the Commonwealth's obligations? Will the Minister review his decisions?

Senator WALSH —The answer to the last question is no. Mr Dawkins wrote a letter in October last year, I think, which was non-specific about the arrangements which would apply. The previous memorandum of understanding, initialled by the Fraser Government, was symptomatic of the type of fiscal irresponsibility that left this Government facing a prospective deficit of $10 billion when it came into office. It has no legislative backing. In other words, it was never ratified by Parliament. I must say I am astounded by Senator Peter Rae. In a reasonably rational way, I concede, he puts the argument in the Senate that this is a States House which exists to protect the interests of the States against the depredations of irresponsible Commonwealth governments. This was a perfect example of the need to protect the interests of the States against the irresponsible fiscal behaviour of the Fraser Government in the way it recklessly handed out money-it distributed money like confetti at a wedding-in the Northern Territory.

Far from being hard on the Northern Territory, the Commonwealth in fact paid-I think the term is the emerging cost, but I will put a caveat over that because I might have confused the two types involved here-on an annual basis, in all the time between 1978 and July 1984, the cost of superannuation for Northern Territory public servants. That was not an arrangement which could continue in perpetuity. Under that system, under which the Commonwealth met the bill explicitly for the superannuation liability and also, of course, for the Northern Territory as a whole, the Northern Territory Public Service exploded to the point where it now embraces one-third of all persons employed in the Northern Territory. The comparable figure for the States is about one-quarter. After adjustments for changed transfers or changed definitions, the Northern Territory Public Service has been growing since 1979, which is when the transfer took place, at a rate of 3.6 per cent a year. I know that in one recent year the Commonwealth Public Service grew at a faster rate than that. In 1983-84, because of the full year effect of decisions made by the Fraser Government, the Commonwealth Public Service grew by above 4 per cent. However, the long term growth rate for the Commonwealth Public Service is far below the 3.6 per cent growth rate in the Northern Territory. I also point out that, if that 3.6 per cent growth rate were allowed to persist in perpetuity, within 174 years the number of persons employed in the Northern Territory Public Service would equal the present total work force of Australia. As with the money, so it was with the bodies. That is worth repeating; if that compound growth rate were allowed to continue indefinitely, in 174 years the number of people employed in the Northern Territory Public Service would equal the present work force of Australia. If one wants to look at it in terms of money, there is a slightly different concept. If one were to extrapolate into the future the five-year average of the growth of Commonwealth payments to the Northern Territory and growth of gross domestic product of Australia, one would find at the end of that calculation that within 137 years Commonwealth payments to the Northern Territory would consume the gross domestic product of Australia. In other words, the Northern Territory would consume the entire output of the Australian economy. I should add that that is something which could never happen; it is a mathematical extrapolation. Nevertheless it is true, and what it draws attention to is that the fiscal irresponsibility of the Fraser Government, as it applied to the Northern Territory, has produced the most bloated and feather-bedded Public Service in the country. There was never any legislative backing for the scandalously generous arrangement that the Fraser Government entered into-with, I add, the full support of the Deputy Leader of the Liberal Party of Australia, who now purports to be fiscally responsible-and it had to stop. The only thing in doubt was when it had to stop, and this Government decided that there would never be a better time to stop it than now.

Senator PETER RAE —I ask a supplementary question. I just wonder whether the Minister will come back to the point. The point is: Does it not repudiate the agreement made on 25 October 1984 by the present Government and his immediate predecessor on behalf of this Government-not the previous Fraser Government-and the Government of the Northern Territory?

Senator WALSH —No.