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Thursday, 28 November 1974
Page: 2913

Senator MAUNSELL (Queensland) - The Opposition supports this Bill. As was outlined in the second reading speech, it seeks to increase the pension of those who have retired under either the Defence Forces Retirement Benefits Act or the Defence Forces Retirement and Death Benefits Act 1973-1974. These are interim payments to offset inflation and what has been taken into account in arriving at these increases is the 16.2 per cent increase in the average weekly earnings from March 1973 to March 1974. The Opposition has supported in the past increases in pensions, particularly to those who were eligible under the pre- 1959 Act and the post- 1959 Act. The Joint Select Committee on Defence Forces Retirement Benefits Legislation, known as the Jess Committee, recommended that there be automatic annual adjustments based on average weekly earnings. So far the Government has not been able to bring down legislation to give effect to that recommendation. I can understand that there are problems associated with it. The Committee also recommended that the anomalies that have existed between those who retired prior to the 1972 Act and those who have retired since be cleared up.

The Opposition queries whether the 16.2 per cent increase of these pensions is sufficient to combat the galloping inflation which is taking place in this country at present. It also feels that although the Government has a committee working apparently to try to iron out the anomalies between the provisions which operated prior to the 1972 scheme and those which apply to members who retired after the 1972 scheme, it is apparently taking a long time for this to be done. The Opposition, as was mentioned in the other place, recommends that the Jess Committee or its equivalent be reestablished in order to check on the anomalies and to bring, as we call it, justice to a lot of those people who retired prior to the new scheme coming into effect on 1 October 1972. 1 believe that a case has been made out for this move. In considering this question we can only go on actuarial figures. I ask the Senate to compare the 1972 scheme with the 1959 scheme. In 1959 the contribution of the employer, that is the Government, was about 78 per cent. In fact it may have been more than 78 per cent. The scheme was designed to comprise a 78 per cent contribution by the Government and approximately a 22 per cent contribution by the contributors. The Actuary has given figures for the DFRDB scheme as at 1 October 1972. They show that there was a 9 1 per cent contribution by the Government and a 9 percent contribution by the contributors.

If these figures are. correct and the Government was contributing 78 per cent in 1959 the Government would have paid $350 for every $100 paid by a contributor. Under the new scheme with a 91 per cent contribution by the Government- I am going on the Actuary's estimate in this case- for every $100 paid by contributors the Commonwealth will contribute something like $1,000. In other words under the previous scheme $100 worth of contribution would purchase something like $450 of benefit and under the present scheme will purchase about $1,100 worth of benefits. There is very little drain on the funds of superannuation schemes when the schemes are first implemented. Funds of superannuation schemes are usually built up to a high degree in the first few years of a scheme's operation. This is what happened, of course, in the original DFRB scheme. Under this scheme the Commonwealth does not contribute at the same time as do the contributors. In most superannuation schemes the employer matches the employee's contribution at the time the employee's contribution is made and both contributions are paid into the fund. But under this scheme the Commonwealth pays its share only when withdrawals from the fund take place. Consequently, until the introduction of this new scheme, a great deal of the money that had been withdrawn from the fund had, in fact, been contributors' money. 1 think we recommended that the Commonwealth's contribution should be paid at the same time as is the contributor's. I know that there was a surplus of some millions of dollars prior to the new scheme's coming into operation. Anyone who was a serving member of the Forces until 1 October 1972 was able to adjust his contribution and become a member of this new scheme. Of course those who retired prior to that date were paid under the provisions of the old scheme.

I think when we have a scheme that is as beneficial as the new one has proved to be- this can be seen from the figures I gave earlier- there is a case for ensuring that those people who retired prior to I October 1972, whether as a result of accident or because they had to retire, have a deal that is at least reasonably comparable to the scheme applying to those who retire after 1 October 1 972. This is why I believe we should set up a committee. I know that a letter has been sent to the Minister for Defence asking that a committee be set up with the following terms of reference:

(   1 ) Arc there any anomalies, inequities or injustices suffered by beneficiaries under the DFRB Act 1948-1973 who retired prior to I October 1972?

(2)   What measures should bc taken to correct the anomalies, inequities or injustices, if any, revealed by such inquiry?

If the Government is prepared to reconstitute this committee to look at those 2 aspects and report back to the Parliament we will be able to satisfy most of the complaints of those people who retired prior to that date. I think something like 8,000 or 9,000 people are involved. They feel that they have suffered an injustice because they do not come under the provisions of the new Act. They want to know how they can come under the new Act. I think it is a matter for a committee of this Parliament to sort this out as promptly as it can.

Senator Devitt - Do you mean an investigation confined to those 2 particular points?

Senator MAUNSELL - Yes, those 2 matters I mentioned. We welcome this Bill and we hope it has a speedy passage through the Parliament.

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