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Thursday, 17 February 1977

Mr McLEAY (Boothby) (Minister for Construction and Minister Assisting the Minister for Defence) - I move

That the Bill be now read a second time.

I point out by way of explanation that the Minister for Defence (Mr Killen) is in Western Australia on Government business and I am introducing this Bill in his absence. The purpose of the Bill is to increase pension benefits payable under the Defence Forces Retirement Benefits Act 1948 and the Defence Force Retirement and Death Benefits Act 1973. Honourable members will recall that my colleague, the Minister for Defence, made brief reference in this House on 9 December last to the proposed introduction of the necessary legislation in the autumn session of the Parliament to give effect to the Government's pension increases undertakings.

The Bill provides for pension increases payable in respect of the year 1976-77 to apply retrospectively to the first pension pay day in July 1976. Additionally, provision is made for the automatic annual adjustment of pensions in future years to operate also from the first pension pay day in July of each year. The need for separate Acts of Parliament which has characterised the annual pension increases granted since 1973, will, I am pleased to announce, no longer be necessary. The increases in defence forces retirement benefits and defence force retirement and death benefits pensions for the year 1976-77 and in the future will be related to the percentage increase in the consumer price index during the period of 12 months ending 31 March immediately preceding the date of effect of each annual adjustment. The pension adjustment factor for 1976-77 which derives from the movements in the consumer price index during the year ended 31 March 1 976 is 13.4 per cent.

The adjustment provisions incorporated in the Bill are detailed and complex. I propose therefore to explain in broad terms only how they are to operate. A more detailed explanation of their practical effects will be made available to beneficiaries by the Defence Force Retirement and Death Benefits Authority when the increased rates of pension become payable. For DFRB pensioners, that is those who retired prior to 1 October 1972, the amount of the increase will be determined by applying the relevant pension adjustment factor to the total pension payable as at 30 June of each year. Pensions payable to widows and the additional pension payable in respect of eligible children will be adjusted on the same basis. DFRDB pensioners- those retired since 30 September 1972- who are in receipt of retirement pay, are to receive increases by applying the same pension adjustment factor to an amount that represents the amount of retirement pay remaining as if the member had commuted to the fullest possible extent following his retirement.

Pensions payable to the widows of DFRDB retirement pensioners will be adjusted by applying the pension adjustment factor to that proportion of the widow's pension that bears the same ratio as the member's residual pension, or notional residual pension as the case may be, to his total retirement pay at retirement. DFRDB invalidity pensions, and the pensions payable to the widows of deceased contributors and of invalidity pensioners are to be adjusted in full. Appropriate adjustments will also be made to the additional component of pensions payable to children.

In essence, therefore, the pension updating arrangements encompassed by this Bill achieve the earlier stated aim of consistency with those currently applying to comparable classes of pensioners under the Commonwealth Public Service superannuation schemes.

It was intended also to provide in this Bill beneficial amendments to section 25 of the Defence Force Retirement and Death Benefits Act designed to remove an anomaly affecting certain officers who were detrimentally affected by their transfer to the DFRDB scheme in Ocotber 1972. Drafting of the necessary amendments has raised a number of complex technical drafting difficulties. The pension updating provisions are therefore being introduced now and drafting of the amendments to section 25 of the Defence Force Retirement and Death Benefits Act is proceeding for introduction as quickly as possible into the House. I take the opportunity of mentioning that the Government is currently considering a number of beneficial variations to the existing legislation arising from a general review of the reversionary benefits structures of the DFRB and DFRDB schemes. I can assure the House that when the Government has made its decisions, proposed amendments will be introduced as soon as possible. I commend the Bill to the House.

Debate (on motion by Mr Connor) adjourned.

Sitting suspended from 12.50 to 2.15 p.m.

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