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Tuesday, 23 August 1983
Page: 24

Mr DAWKINS (Minister for Finance) —For the information of honourable members, I table a report entitled 'Review of the Commonwealth Superannuation Scheme'. I seek leave to make a short statement.

Leave granted.

Mr DAWKINS —I thank the House. This report was prepared by Mr O. F. Roach, who was then a partner in the firm of consulting actuaries, E. S. Knight & Co. It was provided to the previous Government just before the general election. Mr Roach was asked to compare the advantages and/or disadvantages of the Commonwealth Superannuation Scheme with those of other schemes available for comparable staff in the private sector and for State public servants. This was a formidable task, because the diversity of arrangements throughout Australia makes it difficult to draw meaningful comparisons between schemes. Moreover, as the report points out, superannuation benefits are part only of the total conditions of employment and the only satisfactory comparison would be one based on the value of all such conditions. This was, of course, beyond Mr Roach's terms of reference.

As I mentioned in my Press release on 11 July 1983, when my predecessor, Senator the Hon. Dame Margaret Guilfoyle, brought Mr Roach's report to my attention shortly after the election, she said she had not planned to release the report. Some weeks before my 11 July Press release I passed a copy of the report to the Chairman of the Senate Standing Committee on Finance and Government Operations. During the parliamentary recess, I circulated copies of the report to all members and senators; copies can also be purchased from the Australian Government Publishing Service bookshops. The report complements other information on the Commonwealth superannuation scheme which is available to the Parliament and the community, including a report recently prepared by Mr J. R. Ford, the Australian Government Actuary, on the long term costs of the scheme and the comprehensive annual reports prepared by the Commissioner for Superannuation and the Superannuation Fund Investment Trust.

The Commonwealth has provided superannuation benefits to its employees since 1922. The present scheme, which was introduced by the previous Government in 1976, is the largest occupational superannuation scheme in Australia. The explanatory memorandum to the Superannuation Bill 1976 contained actuarial estimates showing that the cost of the new arrangements, as measured by the new entrant employer contribution rate, was expected to be similar to that of the previous scheme. This assessment has been confirmed by Mr Ford's report in the light of his review of the overall experience of the early years of the new scheme. In a separate exercise however, Mr Ford has identified substantial differences in the employer contribution rate attributable to individual authorities whose employees are members of the scheme. These differences reflect the particular circumstances of authorities, including substantial variations in their experience in relation to invalidity retirements. The fact that there are large differences between authorities in the assessed cost of providing identical benefits underlines the need for examination of the level and form of benefits provided in any comparison of occupational superannuation schemes.

Mr Roach compares the Commonwealth scheme with other schemes from this standpoint. He describes the principal form of benefit provided under the scheme -that is, an indexed pension-as an 'ideal' form of benefit, but notes that the provision of benefits in pension form is a disadvantage when lump sum recipients are able to reduce the income tax payable and maximise their social security benefits.

These comments were, of course, made before the Government's announcement of major measures affecting the taxation of lump sum benefits and other initiatives relating to retirement incomes. We are committed to an ongoing program of reform in this area, including ensuring that superannuation benefits in the Commonwealth's own area of employment are consistent with our broader policies, and that greater opportunities are available to private sector employees to gain access to the secure and regular retirement incomes which Australian governments provide to their retired employees. That is the objective of the important changes we have under consideration to enable annuities to be provided on more attractive terms than at present.

In developing further initiatives in relation to retirement incomes, the Government will have available to it a wide range of information and advice, including the studies by Mr Roach and Mr Ford, the report of the Commonwealth Task Force on Occupational Superannuation and the advice of the Australian Council of Trade Unions, Confederation of Australian Industry and Government officials working group on superannuation matters.