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Joint Standing Committee on Foreign Affairs, Defence and Trade
Australia’s trade and investment relationship with the United Kingdom

ARCHER, Mr Harold, Private capacity

TILLEY, Mr James, Honorary Chairman, British Pensions in Australia


CHAIR: Welcome. We really appreciate your joining us today to give us the benefit of your experience. Is there anything you would like to add about the capacity in which you appear?

Mr Archer : I am not affiliated with any organisation nor am I associated with any companies at all. So, it is purely personal.

CHAIR: Do you have an opening statement?

Mr Archer : Yes, I will give you one. I have already submitted a paper about the nonindexation of UK pensions and I have given a written response to that. I will give you a summary of that today. Also, I was asked whether I would give my personal view on a trade agreement, should Australia even be entering into one, with the UK. I have some comments that I can give you.

CHAIR: Fantastic; thank you.

Mr Archer : For years the UK government has been discriminating against retirees in certain countries, predominantly Commonwealth countries such as Australia, by not uprating the pensions each year. This saves the UK Exchequer about half a billion pounds a year. While they do this, of course, there are many retirees living abroad, and you have thousands of them in Australia who are suffering quite badly because their pensions are not being uprated.

The pension system in the UK is different from Australia. In Australia it is means tested. In the UK it is contributory and mandatory. You have to pay it for so many years to obtain a pension. In our casethat of my wife and Iit was 40 years that we had to pay a pension. From our point of view, had we not moved to Australia, we would be living in the UK now. We would have been receiving a pension and it would be indexed every year. I think you have heard of 'triple lock', which is consumer prices, wages or 2½ per centwhichever is greaterwhen the pension gets uprated.

Coming to Australia, we have only been retired for a few years and already it is costing us the equivalent of about $5,000 this year. That will continue. That is just us. If you take the quarter of a million retirees in Australia from the UK who are not having their pensions uprated, the Australian government is having to make that up because these people are suffering financial hardship. That will increase year on year and the cost will come back onto the Australian government. From my point of view, it is very unfair that it should be like that. In relation to British pensions, they have been working for about 17 years trying to get the UK government to uprate pensions and the UK government has refused to do it.

Australia is about to enter these trade agreements which you were talking about just now in terms of 'should you do this or should you not?' This is a golden opportunity to say to the UK government, 'Yes, we will agree a trade agreement but we will not do it or ratify it until you agree to do this.'

The UK government have said, 'We are not going to have any new reciprocal agreements with any countries.' But this week they are actually doing that very thing with the European Union. They are looking to have a reciprocal agreement with the European Union post Brexit for uprating pensions paid in Europe. So there is no reason why they should not do this for Australia. Having described what the issue is, I think that is something that you as a group can address as you go through with the negotiations.

I will just move on and say that, should you be having a trade agreement with the UK at allany free trade agreement is normally good for any country; it is a positive thing to doit will bring about two things. It will bring free trade and also free movement of people. That is something you are going to have to address as a country. My moving to Australia created a number of new jobs that were never in Australia before. It is a positive thing if this happens. It was not just new jobs; it was new jobs with new technology. I would say that is a positive thing to look at.

I was listening to your previous people. They were talking about what you can do and what you cannot do. If Britain leave the EU, they have to decide whether they want to leave the Customs Union. This is more important than whether or not they have Brexit. If they do not leave the Customs Union, you cannot really negotiate with them, because they cannot have an agreement with you while they are still in the Customs Union.

I do not how many million lorries there are that come through Dover, Calais and the other ports as well, but it would be absolute chaos. We used to live near there and the whole of the motorway from halfway from London to the coast used to be stacked with lorries sometimes because there would be one incident. If you bring back Customs and Customs checking the lorries going between Europe and the UK, it would be absolute chaos. That can never happen. It is going to be a difficult thing. I cannot see how you can have them remain in the Customs Union but at the same time make agreements with the Commonwealth countries. I think that is a difficulty.

Australia is very strong in things like natural gas. The UK needs natural gas; it is short of it. It is indirectly dependent on Russia for gas at the moment. You understand the world politics. At any moment, the Russians could cut that gas off if they disagree with what NATO or the other countries are doing. It is an issue. You have millions and millions of litres of gas that could be sold to the UK. That is just an example for a good trade. That is my view.

I would say to you, lastly, let us bring about the change and let us save some money for the Australian government. From my point of view, we are not reliant personally on the Australian government. We never will be, as far as we are aware. But, as I explained, we suffer a loss. I feel quite aggrieved about that because of the work I used to do in the UK. I used to work within government. So did my wife. She worked in the NHS. We had very responsible jobs and work there. We feel quite aggrieved. We would like to see your support with regard to the uprating of pensions. That is my piece; thank you.

CHAIR: Thank you, Mr Archer. We will get to questions after we hear an opening statement from Mr Tilley.

Mr Tilley : I have been working on this particular issue probably for nearly most of the last 17 yearsa long time. I was very frustrated at the intransigent words of John Howard to the British government on this particular issue. We have many British pensioners in Australia working together with the Canadians under the heading of the international consortium. The international consortium has been mentioned on several occasions both in parliament and in the press in the UK. We have been pretty active. We have now got to the stage where we have developed a considerable support base in parliament in the UK under the heading of the All-Party Parliamentary Group. I recommend that you visit the website of the All-Party Parliamentary Group, which is, because that will give you a good understanding of the number of people in parliament that are now on our side.

We have several initiatives that we are undertaking in order to force this issue. One which I feel quite proud of is the call for Britain to be suspended from the Commonwealth. People laugh, but I think it is pretty serious, because Britain is completely at odds with the recent Commonwealth charter which very clearly states, if you read it, in the human rights section, 'We'the Commonwealth'are implacably opposed to all forms of discrimination,' and I emphasis 'all forms' because 'all forms', in my view, includes legal forms, because it is a legal form of discrimination that the British government won against our claim in the European Court of Human Rights.

I attended that particular hearing in the European Court of Human Rights. I was appalled to discover that in fact we were denied. We were denied on a legal technicality. According to theI use the words of the legal law lord, Lord Carswell'arcane subtleties of British discrimination law, it is not discrimination.' We pensioners living in Australia, Canada, New Zealand, South Africa, Trinidad and Antigo do not have a bilateral agreement with the UK; whereas the USA, Israel, Jamaica and Barbados do, and so on. Consequently, because they have a bilateral agreement and we do not, the arcane subtleties of British discrimination law say we are different and consequently it is not discrimination.

I have tried to pursue this with a gentleman who you are probably fully aware of, Geoffrey Robertson. Geoffrey is very much of the opinion that he would have won this case in the European Court of Human Rights had we taken the case to him to take forward. But then that is just Geoffrey, as we probably know. Notwithstanding that, I have been trying to pursue him on a regular basis. In fact, I was in Doughty Chambers just a few weeks ago. Unfortunately, Geoffrey was in Brazil so I was not able to sit down and go through a series of legal issues that I feel are very much against Britain's case.

As far as this particular submission is concerned, as I say, we have several initiatives under way. But the one in particular that I find interesting is that Britain is now coming cap in hand to Australia: 'Can you please help us with our trade negotiation skills?' I emphasise 'skills'. I get right away from 'trade negotiations' because we have been told very clearly by both Christian Porter and, I think, Julie Bishop that you cannot link pensions and trade together. I accepted that. But when I saw this initiative here of Britain talking to Steven Ciobo about trade negotiation skills I said, 'Here is an opportunity. Here is an opportunity to perhaps suggest to Australia: don't give Britain any help with trade negotiation skills unless they fix this British pensions issue.' I believe it is an opportunity to conditionally help them. That is the basis of my case. I kept it very much to that point.

There are a whole raft of issues which we could discuss here about British pensions. I am just back from the UK. During my time there I spent some time talking to various people. We have a group of lobbyists who are working on our behalf under the heading of PHA Media. One of their political activists there, a fellow called Tim Snowball, is very supportive of what we are doing. I think he was private secretary to Nick Clegg, of whom you are probably aware. So he is very much aware of what goes on in parliament. He is very well-known in parliament. He is very well-known amongst the Clerks in parliament. He has been helping us. He has been heavily involved in the development of that All-Party Parliamentary Group website.

I approached Tim and said that it is very important to look at the excuses that Britain come up with time and time again when you approach them, when our members write to them and when their own MPs write to their own what I call 'Sir Humphrey Applebys', their public servants. I use that in a deriding way because, quite candidly, one of the reasons I left the UK was to get away from that kind of environment.

You listen to what they have to say: 'We cannot afford it.' This, to me, is absolute and utter rubbish. Number one, they can afford it because the National Insurance contributions pay for the pensions. The money does not come out general revenue; the money comes out of the National Insurance contributions. Everybody in the UK is deducted National Insurance contributions each week or each month, depending on how often they are paid. It is from this National Insurance contributions balance that the pensions are paid.

At the moment the National Insurance contributions collect around 100 billion a year. We are talking of 600 million being the figure that they cannot afford in order to pay our pension increases600 million.

The German judge at the European Court of Human Rights looked down her nose at the QC, Mr Eadie of the British government, and said, 'Please, Mr Eadie put this into perspective.' Mr Eadie was unable to. I have the figures. It is my trade. I am a chartered management accountant. I knew that this figure was 0.7 per cent of the take in National Insurance contributions each year0.7 per cent. Her response, when we provided that figure through our QC to the bench, was: 'Is that all we're talking about?' In other words, it gives you a clue as to how petty this is.

If you do the sumsand I actually made this point on an ABC interview a few months agoit is very simple. There are over 30 million people contributing to the National Insurance contributions in the UK now. Almost everybody who works there pays National Insurance contributions, except 15-year-olds, I think, and I do not think many 15-year-olds are working now. But 30 million pay National Insurance contributions. Divide 30 into 600it is simple mathsand 20 is the answer. That is 20 pounds a year it would cost. Divide 20 by 50 to get roughly the cost per week, and it works out at 40 pence per week. Having just come back from the UK, if you increase National Insurance contributions by 0.6 per cent, and effectively ask people to pay our contributionsin other words, pay a little bit more to the contributionsthis 0.6 per cent would reduce their pay by 40p a week. What will 40p buy in the UK these days? One fag, one cigaretteor, to make it more available to everybody, probably about a third of a litre of petrol. Petrol is about one pound 20p a litre now in the UK. Basically, my view is that, going forward, we should be calling upon the Australian government to refuse to provide any support to Britain in trade negotiation skills.

CHAIR: Thank you, Mr Tilley. I think we get the picture and the contention. I have one question: the figures you have given us, are they for funding the pension shortfall of those British retirees in Australia, or is that the total figure for all expatriate pensioners?

Mr Tilley : All expats.

CHAIR: Thank you.

Mr Tilley : I have the figure for Australia as well. In fact I have calculated the figure for Australia. The benefit to Australia, in my calculation, works out at close on one billion pounds over the four-year budget period.

Mr PERRETT: I want to clarify the pension arrangements. We have made that move as a right to superannuation or making that transition.

Mr Tilley : Yes.

Mr PERRETT: Is it the case with the UK pension, if you do not pay National Insurance contributions, that you have no right to a pension?

Mr Tilley : National Insurance contributions are compulsory.

Mr PERRETT: But if you are unemployed, you have no right to a

Mr Tilley : You are given a credit for unemployment. There is an adjustment. They recognise you are unemployed.

Mr Archer : If you are unemployed or you are at university then you are credited with that. So you have paid them.

Mr PERRETT: If you make 200,000 pounds a year, do you then get a bigger pension? It is just a flat

Mr Tilley : No, it has absolutely nothing to do with the amount of money you put in. It is to do with the number of years contributions you have made. I have two brothers who are both millionaires. They pay a certain percentage of their payor they did when they worked in the UK, the same as I didbut your pension is based on the years of contributions. It has nothing to do with what your earnings are. A lot of people make this mistake.

Mr PERRETT: So if you worked for 40 years, like Mr Archer, you have a greater right than someone who worked for 20 years?

Mr Tilley : Yes. I am a classic case of this, actually, because I came here in 1971. In fact, in some ways I feel a bit of a fraud pushing this issue. In fact, I have been called that. I have been told, 'Whinging pom, go back to Britain.' But I paid for 15 years. In fact, not only did I pay for 15 years; I paid effectively for 12 years. I discovered, when I applied to Britain for my contributions history, that I had 15 years up. I queried this when I went back and they said, 'Whilst you were at university you were waived contributions. You made contributions during your vacations when you worked and you were waived contributions when you were in full-time study.'

Mr PERRETT: The reason I ask is: if that is the ongoing scheme

Mr Tilley : Absolutely.

Mr PERRETT: and the free trade agreement results in significant movement of labourso it is not just for the people who are frozen nowit would be for the people forever more coming to Australia; is that correct?

Mr Tilley : Yes. In fact, one of the things we should recognise is thisI pick this up from the numbers of people that we encourage to join our organisation: there were thousands of people who left the UK back in the 1980s and nineties when Maggie Thatcher was decimating British industry. A lot of them are now working here in Australia, but they have arrived in Australia with 20 years of contributions history, a significant contribution to this pension that they would pick up. When you think about it, over your whole life that is part of your overall financial package. So why should you be penalised because you happen to come to Australia?

CHAIR: Do you get paid in pounds converted?

Mr Tilley : We get paid in Aussie dollars.

Mr Archer : I get paid in pounds. You choose.

Mr Tilley : I get paid in Aussie dollars. Most of our people here in Australia get paid in Aussie dollars. Some get paid in pounds because they decide to keep a bank account in the UK and they use it when they go back on holiday.

Mr LITTLEPROUD: How does that compare to an Australian pension? What is the amount?

Mr Tilley : I have lost track of the Australian pension. I used to be a pensioner, but unfortunately I am rich so

CHAIR: What do you get in your UK pension?

Mr LITTLEPROUD: Can you tell us what you get?

Mr Tilley : I worked for 15 years in the UK. When I approached pension age I contacted the UK to see how many years contributions history I had. This is the interesting point: they said to me, 'You've got 15 years and this is what pension you'll get. However, if you wish, you can make further contributions. You can go back six years and you can go forward from 1961,' which is when I applied, 'up to 65. And you can pay 10 more years voluntary contributions.'

Mr LITTLEPROUD: So the amount is predicated by the amount of years you are in. It is not an arbitrary amount so that everybody just gets

Mr Archer : No, you have to have 35 yearsit is 35 years now.

Mr LITTLEPROUD: So it is a minimum of five years, did you say?

Mr Archer : Thirty-five.

Mr Tilley : Again I have got six different sets of rules, and a lot of people get very confused about this. They depend upon your date of birth and they depend upon your gender. So women have a slightly different arrangement to men.


Mr Tilley : I know; exactly. But they are trying to fix that now by bringing them together. In fact, there is an organisation called the WASPI in the UK, Women Against State Pension Inequality, because they are furious that they thought they were going to retire at 60 and they now find that is pushing out towards 66. A lot of them are getting very cross about that.

Mr LITTLEPROUD: Just to be specific, could you give us a range? Could you say that, as a minimum, it would be $400 a fortnight, ranging out to $800 a fortnight, or whatever it may be?

Mr Tilley : I personally get aroundagain this is roughly$320 a month from the UK.

CHAIR: For 15 years of

Mr Tilley : No, this is for 25 years because I paid for a further 10 years.

CHAIR: Mr Archer?

Mr Tilley : And the other thing about that 10

CHAIR: Sorry, Mr Tilley; we have limited time. Mr Archer?

Mr Archer : From our point of view, the basic state pension now has changed. If you retire today, you get 140 pounds a week. That is what they get. In my case I have a basic state pension and because for part of my employment I did not have the equivalent of a super fund, I had to pay additional pension contributions to government, which is called SERPS, which is in that document that I have given you. My pension works out at something like 285 pounds per week, which is payable every four weeks. My wife was in the NHS, so she has a pension like yours, an indexed one. She receives about 5,000 pounds a year.

Mr LITTLEPROUD: Is that in addition to any superannuation you have in Australia?

Mr Archer : Yes.

Mr LITTLEPROUD: This is in addition to your super. This is not what our social security system is in terms of an age pension?

Mr Archer : No, I have no state pension here. I have a super fund here.

Mr Tilley : They are very different.

Mr LITTLEPROUD: I appreciate that. I was trying to get my head around it.

CHAIR: Yes, we are just trying to get our head around it.

Mr LITTLEPROUD: It is a foreign concept.

Mr Archer : I know. It is very foreign.

Mr Tilley : A lot of people do not understand it. One of the other things is that it is not means tested.

Mr LITTLEPROUD: Exactly. That is what Senator McKenzie and I were getting at.

Mr Archer : If you had a company and you paid these contributions into a company, and they came along and said, 'You've moved to Australia. We're not going to index it,' that would be before the courts; yet the UK government can do this.

CHAIR: The differential between the list of countries where British pensioners are affected and, obviously, there have been arrangements that you have

Mr Archer : Europe has a reciprocal agreement. Everywhere within not just Europe but the free trade area, which includes Sweden, Norway and the others

Mr Tilley : Iceland, Norway, Switzerland.

Mr Archer : Yes, that is all included. For everyone, wherever you go, pensions are uprated. America is as well because they said to the British government, 'You've got to do it and that's it.'

CHAIR: You referenced an agreement between, say, the US and Britain. It was called a bilateral agreement.

Mr Tilley : A bilateral agreement, yes.

CHAIR: When were those negotiated?

Mr Tilley : The last one apparently was negotiated in about 1981 or 1982. Since then Britain has refused point blank. Australia has tried on several occasions to negotiate agreements and they have just been turned down every time. There was some form of agreement between Australia and the UK until about 2001, when Jocelyn Newman pulled the rug because they were absolutely adamant that they, the UK government, would not change the rules.

CHAIR: Thank you very much for that evidence. The reason we wanted to hear from you, out of all the submissionswe are not hearing from everybody that has made a submissionwas that there is a significant number of you living in Australia, and this is an anomaly that a lot of us had no idea was actually occurring.

Mr Tilley : It is amazing the number of people that are unaware of it.

CHAIR: Thank you for raising the issue with the committee.

Mr Archer : Thank you.

Mr Tilley : Thank you.

CHAIR: The subcommittee's next meeting is scheduled for Monday, 7 August, in Canberra.

Resolved tha t these proceedings be published.

Subcommittee adjourned at 16 : 25