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Tuesday, 23 October 1956

Mr WILSON (Sturt) .- It is with enthusiasm that I support this Superannuation Bill, because it is a step towards ultimate justice to a fine body of men who, in their younger years, their years of employment, are saving for their retirement, providing themselves with security for the time when they are no longer able to work. Divorced from its frills and from its mysteries, superannuation is nothing more than a system of compulsory saving, coupled with a system of pooling risks. When people join the Commonwealth Public Service on a permanent basis they are compelled to make a contribution towards superannuation. According to the salary grade of the position that they occupy they have certain rights to take out units of superannuation additional to the base number of units in order to provide for their retirement and old age. No means test applies in respect of superannuation pensions and there is, therefore, no discouragement to thrift. When a Commonwealth officer joins this scheme he knows that when the appropriate time comes he will receive either a lump sum payment from the fund, if he retires before the due retiring age, or a regular pension if he retires at, or after, the due retiring age.

At page 26 the Auditor-General's Report shows that the Commonwealth superannuation scheme is entirely self-supporting, lt is true that the Government makes pro-rata contributions to this fund, but the figures show that payments into the fund by civil servants exceed payments out of the fund to retired civil servants by way of pensions or lump sums. The result is that over a period of years a very large reserve has accumulated in the fund which, as at 30th June, 1956, amounted to £44,388,000. Almost the whole of that reserve is lent to the Government, and therefore plays a valuable part in the development of Australia. For the year ended June, 1956, the contributions to the fund by civil servants amounted to, in round figures to the nearest thousand pounds, £5,462,000. Payments out of the fund to retired civil servants totalled in that year £4,903,000. This means that there was an excess of payments into the fund by civil servants, over the amount drawn from the fund by retired civil servants, of about £500,000.

Now, a question arises which I believe to be mainly a question for civil servants themselves to decide. That is, whether it is necessary to continue to build up this fund in perpetuity. If this were a private fund there is not the slightest doubt that it would be necessary to go on building it up so that it could meet the possibility of a firm's going out of business while there were still superannuation commitments to be met in respect of officers of the firm who had not yet reached the retiring age. In the case of the Commonwealth Superannuation Fund, however, we have a permanent fund. The civil service will always be with us because that is of the nature of things, and experience has shown that the number of people employed in the civil service tends to increase rather than decrease. Therefore, I think it can be said without any fear of contradiction that there will always be contributors to this fund. I understand that at present there are something like 80,000 contributors to the fund. That being so, surely there will always be income accruing to the fund, and surely all that is necessary to give complete security to Commonwealth civil servants is to see that in every year the liabilities of the fund - the amounts which will have to be paid out in pensions and lump sums - will always be matched by contributions to the fund.

Experience shows that assets and reserves have been building up in this fund at the rate of approximately £4,000.000 a year. The Auditor-General at page 26 of his report shows that the assets of the fund in 1953 amounted to £30.404,000; in 1954, to £34,813,000; in 1955, to £39,471,000; and in the financial year ended 30th June last, to £44,388,000. It is true that a large part of that reserve has been built up by Commonwealth contributions to the fund; but, as I have already shown, at present, even if the Commonwealth made no contribution, the money being paid into the fund by civil servants would exceed the amount being paid out of it to retired civil servants. So, I think civil servants should consider whether the present pension unit should not be increased. It is true that the retirement pension has increased from 10s. a unit to 17s. 6d. a unit over a period of years. But I suggest that over that same period the cost of living has increased at a faster rate, with the result that retired Commonwealth civil servants are worse off today in the matter of superannuation than they were when the unit was worth only 10s. a week. I believe that the time has arrived when the rate of the superannuation unit should be increased from 17s. 6d. to £1 a week. That would bring superannuation more into line with present costs, and more into line with the value of the unit when it was 10s.. as related to living costs at that time. I believe that can be done without any additional government contribution and without in any way risking the security of the fund. I pointed out that last year civil servants paid into the fund £500,000 more than they drew out of it. In addition to that, the Commonwealth contributed £3.276.000 to the fund and interest on investments amounted to £1,728,000. Even if there were a risk - and heaven forbid - that some future government may fail to make its contribution, [ still suggest that the revenue of the fund from contributions made by officers and from interest on investments is ample to pay a retirement pension of £1 a unit instead of 17s. 6d. a unit, as at present.

Mr Costa - Why does not the honorable member move an amendment to that effect?

Mr WILSON - The adoption of my suggestion would mean that the officer who had four units would receive an increase of 10s. a week, and the officer who had eight units would receive an increase of £1 a week. If the honorable member for Banks had been listening, he would have heard me say that, in my opinion, this is a matter for the civil servants.

Mr Peters - They cannot move an amendment in this Parliament.

Mr WILSON - It is not our function to do anything that might adversely affect the security of the fund which has been built up by the officers themselves. If the Commonwealth officers, after investigating the matter actuarially and in every other way, decided that there would be no risk to the fund by increasing the value of the unit from 17s. 6d. a week to £1 a week and asked this Parliament to implement that decision, I believe that, in the circumstances, the Parliament should agree to accept that risk. I have previously pointed out that, obviously, a private fund must be kept actuarially sound according to insurance methods to meet the contingency of the firm going out of business. But governments do not go out of business. Governments and civil servants go on in perpetuity - though not the same ones - and just as this fund year by year receives contributions in excess of payments, so in the future, I suggest, it will continue to receive contributions. What I suggest to the House is that civil servants should consider whether the present insurance method with actuarial calculations is the correct and modern method for a scheme such as the Commonwealth officers' superannuation fund.

When superannuation schemes were first developed, actuaries prepared calculations by which contributors could be assured that at all times and in all circumstances even if the employer went out of business, those who had contributed to the fund would receive the pensions for which they had contributed. That would apply to the Commonwealth officers' superannuation scheme, if it was a private undertaking, but as governments go on in perpetuity, I believe that the correct method of investigating the soundness or otherwise of the scheme is what is known as the assessment method. I cannot see what good purpose accrues to civil servants by building up a bigger and bigger reserve which will never in any circumstances be used.

A reserve is necessary, of course, but I believe that the time has arrived when the board members of a fund which has a reserve of £44,000,000 should say to members, " We will now pay a retirement allowance which is equal to, but does not exceed, the annual contributions received by the fund ". In other words, the reserve remains static and a retirement pension higher than the present pension is allowed. That would be a tremendous benefit, not only to civil servants, but also to the Government.

At the present time, the superannuation pension is not high enough for a large number of civil servants. Consequently, in addition to their superannuation, they have to apply for an age pension, subject to the means test. Their income is partly age pension and partly superannuation. If they are provided with adequate superannuation, and I suggest that this fund is able to do that, the National Welfare Fund would be relieved of the necessity to pay a certain amount of money. That money could be paid to cases of real hardship which exist as a result of the operation of the means test and the present rate of pension. From the stand-point of the civil servants and the Government, the time has arrived when we should find out whether we can increase the rate of superannuation without in any way jeopardizing the security and soundness of the fund.

I cannot speak too highly of the superannuation fund as a method of providing security for civil servants. My only regret is that it is not national, and does not apply to the whole community. If it did we could abolish the means test and introduce a national scheme of superannuation in which every one would provide for his old age and not, as at present, pay taxes to provide for some one else in his old age. Surely in this enlightened community we should recognize that we will all get old. We all know that when we get old, our earning power is affected. Therefore, we should all be willing to contribute to a fund, just as civil servants do, to provide security as a right when we reach the age of retirement. What we can do for the civil servants, surely we can do for the whole community. The Commonwealth superannuation scheme is accepted willingly - indeed, it is welcomed - by every Commonwealth civil servant. It has proved an absolute boon to them, because it has given them age security. It has allowed them to save and to have the benefit of their thrift and. their earnings without any means test. As I say, if we can do that for the civil servants, why cannot we do it for the whole community?

I suggest what we should look into Hie Commonwealth superannuation scheme, not only for the purpose of providing increased pensions for public servants but also with a view to using it as a model for a scheme for the whole community, so that we may have in this country real age security, with national retiring allowances, free of means test. This example shows that such a scheme can be made self-supporting. It shows, too, that it can be so arranged that the contributions of the younger sections of the community match the payments to the older sections. It proves that a similar scheme for the community as a whole would aid tremendously the development of Australia.

The £44,000,000 in the Commonwealth Superannuation Fund is now being lent to the Government to build schools, hospitals, roads, railways and electricity undertakings and other public works. If, in a reasonably short period of years, it is possible to accumulate a sum of £44,000,000 by contributions from civil servants, subsidized by Government funds, surely we could solve many of our loan problems by making the scheme a national one and, by contributions from all sections of the community under the retirement age, accumulating a fund, with which to assist our public works programme. Above all, we could provide for people of retiring age security and adequate pensions free of means test.

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