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Thursday, 19 March 2015
Page: 1888

Senator BERNARDI (South Australia) (09:50): I rise to speak on the Defence Amendment (Fair Pay for Members of the ADF) Bill 2014. To be frank, I am somewhat surprised that this private senator's bill has not been withdrawn, notwithstanding Senator Lambie's abiding interest in this and notwithstanding her service to our country in the Defence Force. But I would point out that there are many in this place and in the other place who have served with distinction in our Defence Force. I look over my left shoulder and I see Brigadier Linda Reynolds. We have another Brigadier in Andrew Nikolic in the other place. Indeed one of the assistant ministers, Stuart Robert, has served. They are just three who have a deep and abiding interest and a commitment to supporting our armed forces and our Defence personnel. You do not even have to have served in the military to have enormous respect for those who choose to do so. I am in awe, quite frankly, of the servicemen and women who are prepared to give their all on behalf of our freedom. They stand in a great tradition and I stand with them albeit as someone who has not served.

With respect to this bill, some of the assertions that have been put forward by Senator Lambie are simply wrong and her draft bill will not achieve what she is seeking to achieve. I understand that Senator Lambie is concerned about Australian Defence Force pay—many of us are. But her bill to link ADF pay to politicians' pay or inflation as it is now, whichever is the higher, would most likely see no advance in ADF pay other than that which has occurred already. In actual fact, a case could be made that if this bill were successful, there could actually be a decline in ADF pay for personnel. The question arises: why is this? Let me explain.

First of all, parliamentary salaries are currently frozen. Parliamentarians will receive no pay rise in 2014 or in 2015. So if you were to tie ADF salaries to parliamentarians' pay at present, ADF personnel would get a zero increase. It is not the first time we have had a zero increase. A couple of years ago we had a zero increase as well, and who is to say what may happen in the future?

Secondly, Senator Lambie quotes some consumer price index inflation figures but she fails to look at the forward forecasts and the low inflation—in fact some would suggest deflationary—environment in which the world currently finds itself. Inflation for the year to December 2014 was 1.7 per cent. The Reserve Bank of Australia is forecasting inflation to June of this year to fall to 1.25 per cent. The National Australia Bank's forward-looking forecast has a rate to December of this year of only 1.2 per cent. Once again, I say that we are experiencing what the rest of the world is experiencing—that is, a deflationary environment.

So ADF members, who were awarded a 1.5 per cent increase last November, which will be lifted to 2 per cent from March—assuming that Defence Force Remuneration Tribunal agrees with the government's proposal—are already keeping level with or doing slightly better than current inflation rates, which is unlikely to be more than two per cent for the foreseeable future. Were inflation to come into under two per cent—say, as forecast by the National Australia Bank, around 1.2—under Senator Lambie's bill, ADF personnel would get less than what the government is already proposing. So the two per cent per annum pay rise already on offer to the ADF personnel from the government is likely to be both better than inflation and better than what parliamentarians end up receiving. Therefore, it will be better than what would be delivered by Senator Lambie's formula. In fact, if you look at the pay rises awarded by the Defence Force Remuneration Tribunal over the past 10 years, they have averaged more than inflation. ADF pay rises under the workplace remuneration arrangements have totalled 38 per cent in simple addition terms, whereas CPI increases have totalled 28 per cent. So I would caution the Senate, and I would caution Senator Lambie, about being too keen to link ADF salaries to the CPI. If history is anything to go by, this would erode their advance very rapidly.

I would also like to deal with some of the misconceptions. Senator Lambie's press release announcing her bill underestimated ADF workplace remuneration agreement pay rises over 2005 to 2014. Between those years, ADF personnel have received increases of 32.8 per cent, an average increase of 3.28 per cent per year, which is marginally more—0.28 per cent—than that cited by Senator Lambie. Moreover, the large increase in remuneration for parliamentarians in 2012, which was included in Senator Lambie's calculations and purported to show that parliamentarians had done better than ADF personnel, resulted from a comprehensive work-value review. It is not dissimilar to the Defence Force Remuneration Reform Project, in 2007-09, which reformed ADF pay structures and resulted in many ADF members receiving increases from previous pay points.

If this work-value review is removed from the equation, ADF wage increases have actually been virtually equal to parliamentarians' wage increases in the 2005 to 2014 period selected by Senator Lambie. Parliamentarians' pay rises between that period awarded by the Remuneration Tribunal totalled 33.2 per cent, whereas ADF pay rises in this period totalled 32.8 per cent, meaning that there is less than half a per cent difference over the decade.

So, over the last decade, as it happens ADF wage increases have broadly reflected those received by parliamentarians. This does not count the advances between pay points or the promotions received by ADF personnel. So I do not see what Senator Lambie's bill will actually achieve. And, of course, at the moment parliamentarians' pay is frozen, whereas ADF personnel will get a two per cent increase over the next three years. I should also note that the Remuneration Tribunal has a long-held view that setting remuneration for one office by reference to another office does not lead to defensible or meaningful wage outcomes.

To recap, increasing the ADF pay offer to two per cent per annum will increase the likelihood going forward that ADF members do better than inflation and better than parliamentarians. I do not doubt that Senator Lambie is concerned about the issue of Defence Force pay. However, I think she needs to get the perspective right and she needs to get her assertions correct. It must also be remembered that salary is only one component of ADF remuneration. ADF personnel receive and deserve decent superannuation, competency based allowances, free medical and dental treatment, subsidised housing and a range of other benefits. ADF personnel involved in war-like operations receive a full tax exemption on their income. All of these, I reiterate, are absolutely right and proper, and, I believe, entirely well deserved.

Significantly, Labor supports the government's new policy of a two per cent per annum offer to ADF personnel. The Leader of the Opposition, Mr Shorten, in a media release dated 4 March 2015 said that 'Labor welcomes the decision.' At question time on the same day he also said that Labor welcomes the decision. In a press conference that same day, Senator Conroy, the shadow defence minister said:

Labor welcomes this decision today to recognise the unique service of Australia's Defence personnel.

…   …   …

We think that this is an excellent decision …

Ms Brodtmann, the shadow parliamentary secretary for defence, also said 'we welcome this decision'. The conclusion is that Labor welcomes the government's decision.

That being the case I cannot imagine that the Labor Party will be supporting the bill currently before the Senate, because it would throw the government's two per cent per annum pay offer to ADF personnel into doubt, and it could in fact put ADF personnel in a worse position.

The coalition recognises the unique nature of military service and the sacrifices made by Defence personnel and their families, and we have had a strong record of supporting those who serve in our name. I make the point again that we have a number of people in the coalition who have served our country and our nation with absolute distinction. I think they provide a fantastic insight for the coalition into the serving conditions of our military personnel. As a consequence of that, the coalition has already delivered on substantial initiatives which assist ADF members and their families. In January 2014 the coalition delivered the ADF Family Health Program to more than 70,000 eligible dependents of ADF members. Under this program, eligible ADF dependents were reimbursed for all out-of-pocket expenses for GP services. Additionally, each ADF dependent is able to claim back up to $400 per year for allied health services such as dentistry, physiotherapy, psychology and podiatry. Importantly, families are able to pool their allocations to enable greater support for an eligible dependent with higher needs. The program has seen ADF dependents enjoy supported access to over 100,000 allied health and GP consultations, and this program demonstrates the government's commitment to supporting ADF members and their families.

The government's priority is also to ensure we have in place the mental health services and support mechanisms that are needed for veterans, ADF personnel and their families. With the increased operational deployment of the Australian defence forces over more than a decade and the draw-down of ADF operations in Afghanistan more recently, we need to better understand the physical, mental and social health needs of both serving and ex-serving personnel. In June 2014 the government provided $5 million to fund the Transition and Wellbeing Research Program—a crucial study into the mental health and wellbeing of service personnel and veterans. This program is the largest and most comprehensive program of study undertaken in Australia to examine the impact of military service on the mental, physical and social health of serving and ex-serving personnel, and their families, who have been deployed to contemporary conflicts.

The Australian government is absolutely committed to ensuring ADF members are provided with the best possible health care. As part of this objective, the government launched the new $133 million Defence eHealth System in September 2014. This system links ADF members' health data from recruitment to discharge and improves the availability of accurate, up-to-date health data to Defence members' treating clinicians and their health care providers. Importantly, it will also allow health information to be easily and accurately passed to the Department of Veterans' Affairs as well as to civilian health providers.

The government has announced that it will provide a full income tax exemption for the pay and allowances of ADF personnel deployed on operations MANITOU and ACCORDION. This was outlined in the government's Mid-Year Economic and Fiscal Outlook 2014-15. This change will align the tax treatment for all ADF members who serve on any of the operations across the Middle East region. Given the continuing disparities in the taxation arrangements for ADF personnel in the Middle East region, namely in relation to ADF personnel deployed on Operation OKRA, the Treasurer decided to allow a full income tax exemption for the pay and allowances of all ADF personnel deployed on that operation.

On 17 July 2014 the government delivered on its commitment to repeal the carbon tax. The coalition's legislation took effect from 1 July 2014 and ensured the burden of the carbon tax was removed from Defence personnel—as it was for families and individuals right across the country. Let us remind ourselves that under the Labor government the carbon tax was applied to everyone in the country, and the ADF were not immune from that. The Gillard government specifically regulated to ensure ADF personnel were hit by the cost of the carbon tax from 1 July 2012, and the ABS statistics show that that alone resulted in electricity prices rising by 15 per cent and gas prices rising by 14 per cent. These costs of course are passed onto ADF personnel utilising on-base, long-term and temporary accommodation. So scrapping the carbon tax has been a benefit for everyone in the country.

The coalition recognises that reserves are an important component of Australia's Defence Force. We have long supported the unique skills that reservists bring to Defence and have always supported the important work reservists carry out in order to meet the ADF's objectives both at home and abroad. There are approximately 47,000 reservists, and since 1999 over 21,000 have deployed on operations in locations in the Middle East, Timor Leste and here at home supporting disaster relief efforts. On 30 June 2014 the government announced reserve allowance reforms that reduced red tape and further recognised reservists' service obligations and contribution to capability.

This reform aligned reserve allowances with permanent ADF members' allowances and reduced the administrative burden associated with processing reserve allowances. On 25 August 2014, in recognition of the increasing integration of reservists into ADF operations, the coalition government also launched the trial Reserve Assistance Program. This program runs until 30 June this year and offers a comprehensive range of mental health and wellbeing support services.

Let us not forget it was the previous coalition government in 2001 who introduced landmark legislation to protect the rights of reservists in civilian employment and education. It was also the previous coalition government that created the Defence Home Ownership Assistance Scheme in 2007, a scheme that provides ongoing incentives for both regular and reserve personnel to join and remain in the ADF. It was the previous coalition government who introduced the financial support scheme for employers to help offset the costs of releasing employees for Defence service along with implementing Exercise Executive Stretch, which is aimed at senior, middle and line management to show and involve them in the types of invaluable skills that can be gained through participation in ADF Reserves.

We have a good track record and I think there is no higher priority for a coalition government than ensuring our national security and that means supporting our ADF personnel. It was the Howard government upon its election in 1996 that first went about repairing and rebuilding Australia's modern defences. In the 13 Labor budgets between 1982 and 1983, and 1995 and 96 Labor cut Defence spending by 8.9 per cent in real terms. After the debt and deficit that was a consequence of the Hawke and Keating years, repairing the federal budget was a first priority but the Howard government recognised that a strong economy is critical to funding a strong Defence Force. Importantly, the Howard government quite rightly quarantined Defence from its initial budget repair work. Over that time, our economy stabilised and we grew the budget from $10.6 billion in 1995-96 to $22 billion in 2007-08, a 47 per cent increase in real terms. We wanted to provide funding certainty and assist the long-term planning needed when building capacity in Defence and that is why we released the 2000 Defence white paper, which committed to three per cent real growth for the defence budget over the following 10 years.

Once again, like Groundhog Day, a recently elected coalition government found itself needing to repair the budget and to stem the bleeding in the Defence portfolio caused by Labor's cuts. Let us remind ourselves that Labor cut $16 billion out of Defence through deferrals, through absorbed costs in the 2009 to 2022 period. As a proportion of GDP, Defence expenditure fell from the coalition's 1.75 per cent of GDP to 1.56 per cent of GDP in 2012-13. This was a figure not seen since 1938. Labor's cuts to Defence in the 2012-13 budget alone were worth $5.5 billion. That saw the largest single-year decrease in Defence expenditure, a massive 10.5 per cent, since the end of the Korean War in 1953. When Labor left office, Defence expenditure was forecast to remain below 1.7 per cent over the next decade. These cuts came despite Labor ministers stating on at least 38 separate occasions that Labor was committed to three per cent annual real growth in the Defence budget.

The coalition government has stated it will take a measured and purposeful approach to rebuilding Australia's defence forces. It is committed to increasing the Defence budget as a proportion of GDP to two per cent over the coming decade. We have provided a down payment on this commitment when this year's budget delivered a 6.1 per cent increase in funding to Defence. We are providing Defence with $29.2 billion in 2014-15 and will provide $122.7 billion over the forward estimates. The leadership and support provided to Defence by the coalition is what the Australian people are entitled to expect from the federal government and we will provide it because we understand the critical role that the Defence Force plays in ensuring our security in an uncertain world.

To conclude, while strongly supporting the serving men and women of the Australian defence forces, the coalition does not support Senator Lambie's private senator's bill. Senator Lambie's bill is the wrong solution to a problem that does not actually exist. The bill will be unnecessarily complex and, if enacted, will have a number of unintended consequences some of which, I think it is fair to say, even Senator Lambie does not intend to create. Finally, the government's move to increase the ADF pay offer from 1.5 per cent to two per cent will now provide an even higher pay increase for ADF personnel than what is provided for by Senator Lambie's bill. I would encourage the Senate not to support this bill.