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Wednesday, 19 November 1986
Page: 2552

Senator GRIMES (Minister for Community Services)(10.29) —I move:

That the Bill be now read a second time.

I seek leave to incorporate the second reading speech in Hansard.

Leave granted.

The speech read as follows-

In his statement on Public Service reforms on 25 September 1986 the Prime Minister announced the Government's intention to introduce measures to contain the rate of invalidity retirements and associated costs under the Commonwealth superannuation scheme.

As part of that initiative this Bill contains provisions which will require invalidity pensioners under the scheme to report any employment. Invalidity pensions will be adjusted where annual earnings exceed a specified limit. In addition the Bill contains a large number of essentially technical provisions intended to update and clarify the operation of the Superannuation Acts 1922 and 1976 and improve the administration of the scheme.

The Commonwealth superannuation scheme is the principal occupational superannuation scheme for Commonwealth sector employees. Of the 74,000 Commonwealth scheme pensioners, 28,000 or almost 38 per cent receive invalidity pensions. Invalidity pensions offer higher benefits than those otherwise obtainable on early age retirement.

A survey of Commonwealth scheme invalidity pensioners conducted earlier this year by the Australian Government Retirement Benefits Office and the Australian Bureau of Statistics has indicated that 12.4 per cent of invalidity pensioners under 65 years of age were employed sometime during 1985. The average earnings of those employed was $4,540 and the average pension paid to them was $15,200.

In 1.3 per cent of cases, earnings from employment plus pension exceeded the salary the pensioners would have received had they continued in their previous Commonwealth employment.

Invalidity pensions payable under the Commonwealth scheme are based on the premise that the recipient is unfit to perform duties. The Government therefore considers it imperative that the invalidity provisions of the scheme should not provide a taxpayer financed supplement to those who engage in employment.

The Bill will amend the provisions of the Superannuation Act 1976 in relation to invalidity pensions payable under that Act and the Superannuation Act 1922 to persons who have not attained 65 years of age. It will require them to provide information to the Commissioner for Superannuation regarding any employment in which they are, or intend to be, engaged during the year.

Invalidity pensions payable to such persons will be reduced on a dollar for dollar basis where the aggregate amount of the pension and income from personal exertion exceeds a specified limit. The Government considers that the limit specified in the Bill would achieve its purpose but at the same time protect persons in receipt of low levels of invalidity pension, and allow all pensioners to earn a small amount of additional income without affecting their pension payments.

Provision is also made for invalidity pensions payable to persons who have not attained age 65 to be cancelled where that pension has been suspended for 12 months because the person failed to provide information on employment or failed to comply with a request to attend a medical examination which would establish whether or not he or she had been restored to health.

The Bill provides that a person who became entitled to an invalidity pension on or after attaining his or her minimum retiring age-generally age 55-will have the option to forgo that pension and receive instead the age or early retirement pension which would have been payable if, at the date the person retired on invalidity grounds, he or she had retired on age grounds.

Taken together the new provisions concerning invalidity pension are expected to result in net savings in excess of $4m per annum. Minimal offsetting costs and savings will result from other measures contained in the Bill which I will now outline.

Consistent with changes in employment practices since the current Commonwealth scheme was introduced in 1976, the provisions concerning the preservation of superannuation rights are to be changed to enable persons to whom deferred benefits apply under the scheme to have access to those benefits on or after attaining the minimum retiring age-generally 55-that would have applied to them had they not ceased to be contributors. Under the existing provisions such benefits become payable on or after a person attains age 60. Deferred benefits paid before age 60 will be payable at a reduced rate.

The Bill provides for certain regulations under the Superannuation Act 1976 to be made with retrospective effect to enable those regulations to operate as originally intended. These provisions would be purely beneficial in nature and would extend intended rights to persons in certain situations that are presently not provided for in the legislation.

In response to a recommendation made by the Auditor-General the Bill adds to the existing auditing provisions contained in the Superannuation Act 1976 so that the superannuation fund investment trust will be subject to `standard' auditing provisions applicable to the generality of statutory authorities.

Other provisions contained in the Bill may broadly be described as `housekeeping' changes which have been identified in the 10 years since the current scheme was introduced. These are intended to ensure that the provisions operate in the manner originally intended, to clarify certain provisions and to improve the administration of the scheme. Detailed explanations of each new provision are contained in the explanatory memorandum.

Passage of this Bill will complete a major overhaul of legislation relating to the Commonwealth superannuation scheme. It will place the scheme on a more efficient footing enabling it to operate in an equitable and economic manner which has due regard for the legitimate concerns of contributors and taxpayers alike. I commend the Bill to the Senate.

Senator GRIMES —Like the Statute Law (Miscellaneous Provisions) Bill (No. 2) 1986 this Bill was amended in the House of Representatives and has to be reprinted by that House. Again, copies will be circulated to honourable senators as soon as stocks are received. We will not seek Senate consideration of the Bill until honourable senators have had the normal time to study it.

Debate (on motion by Senator Kilgariff) adjourned.