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Wednesday, 25 November 1959

Mr COSTA (Banks) .- I do not think that the excuse given by the honorable member for Wentworth (Mr. Bury) for the restricted time allowed by the Government to members to study this bill is valid. He said that the Government wished the beneficiaries to receive the benefit as soon as possible. ' lt is easy to make retrospective provision to overcome that difficulty.

I support the amendment of the Deputy Leader of the Opposition (Mr. Calwell) to withdraw this bill to enable proper consideration to be given to it and also to insert provisions for other benefits. One is that the unit should be increased from 17s. 6d. to £1, and another is to make the benefit to widows retrospective to 1st July last. That would not be an uncommon provision. It was not uncommon when parliamentary salaries were increased to make the increases retrospective. It would be fitting to treat these widows in the same spirit.

I join with the Deputy Leader of the Opposition in protesting against the short time allowed to honorable members to study the contents of this large and very important bill. We do not know really how important it is because we have not had time to examine it properly. It consists of 58 quarto pages, and in addition there is the Minister's second-reading speech of eleven pages. When we are dealing with such measures honorable members should have at least seven days in which to study them. If a bill is presented during the week it should not be dealt with again until after the following week-end. Honorable members might then have the opportunity to give it closer study and to confer with contributors and pensioners to ascertain what they think about it. This would enable us to state their point of view during the debate. This is a big matter and we should be able to give it more mature examination.

The Superannuation Act provides for a contributory scheme of retirement benefits for Government employees and their dependants. This act was first enacted in 1922. At that time values were different, because the basic wage was £4 a week. Now, the Commonwealth basic wage is £13 16s. a week. The value of the superannuation unit in 1922 was 10s. After this legislation was first implemented it was the normal custom for qualified contributors to contribute for eight units at 10s. each which was the equivalent of the basic wage at that time. They thought that by providing for a retiring pension round about the basic wage level or a little better they would be able to retire on what they and everybody else considered to be a reasonable standard of living.

Since that time, our economy has been affected by periods of steady inflation as well as periods of galloping inflation. Prices have never been stable. Therefore the standard of living planned and hoped for by many public servants has never materialized. Unfortunately, many other people who invested for their retirement have had their ideas of a reasonable standard of living smashed by inflation. At that time they made genuine investments in a home and probably an extra real estate property which would bring them in an extra income. But these benefits have been absolutely destroyed by inflation. It is not profitable for a single person to own a house to a value of £2,250, or for a married couple to own a home worth £4,500, because on the basis of present-day values, they are placed in a worse position than a pensioner, as they are disqualified from receiving the age pension. The suggestion to increase the superannuation unit from 17s. 6d. to £1 is reasonable. I support the amendment to withdraw the bill and redraft it to effect such an improvement.

I now wish to discuss the relative value of the superannuation unit of 10s. in 1922 and the present unit of 17s. 6d. I have already pointed out that in 1922 the basic wage was £4 but to-day, when the unit is 17s. 6d., the Commonwealth basic wage is . £13 16s. Although the nominal value of the unit has increased by 75 per cent, the basic wage has increased by a little more than 337 per cent. The relative values of the units are easily seen. As I have already said, the great expectations of the contributors in 1922 and of those in the following years have been smashed by inflation. The principal act was introduced 37 years ago, and some of the original contributors to the scheme who are still living find themselves adversely affected because of the depreciated purchasing power of their superannuation benefits. This has been caused by the tremendous increase in prices. I have already indicated that inflation has destroyed many other values in the assets of people who tried to provide for their old age.

Two further points I wish to make clear. The first is that the value of the unit should be increased in order to raise the purchasing power of the superannuation pension. It is up to the Government, knowing what has happened over the last 37 years, to take precautionary action to prevent future depreciation in the value of superannuation. But if prices and costs are allowed to run along haphazardly there is little doubt that in 37 years' time present contributors will find themselves in a predicament similar to that in which original contributors find themselves to-day. The Government has a responsibility to maintain value in this scheme, and that can be done by making a proper effort to stabilize costs and prices.

I wish to advance some arguments as to why the unit should be increased. The first is that the fund itself is buoyant, according to the Auditor-General's report. Secondly, there has been a big increase in the number of contributors to the fund. It keeps on increasing, and the pool is sufficiently large to finance some improvements such as I have suggested. The investment earnings of the fund could also be increased by wiser investment. I know that investments now made by the board are wisely made and that it invests in giltedged propositions. But possibly ways could be found to earn a greater return. A further argument is that contributors to the superannuation fund save the Government many millions of pounds in social service payments, because .as recipients of a superannuation pension, they are disentitled, in many cases, from social service benefits. The average superannuation pension is £12 6s. 9d. a week. A single age or invalid pensioner is allowed to supplement his pension of £4 15s. a week by earnings of £3 10s. a week without affecting his pension. His permissible income, therefore, totals £8 5s. a week. A Commonwealth public servant who contributes for a pension of £12 6s. 9d. a week thereby disqualifies himself from receiving an age or invalid pension of £4 15s. a week. He saves the Government that amount every week as a result of his having contributed during his working life for a pension of £12 6s. '9d. A married couple of pensionable age may have a total income of £16 10s. a week. If the husband is a Commonwealth superannuation pensioner who has contributed for a pension of £12 6s. 9d. a week, he is saving the Commonwealth .£9 10s. a week in pension, because he and his wife are disqualified from receiving an age or invalid pension.

I should say that the Government possibly saves in many ways because Commonwealth public servants contribute for superannuation pensions. Not only do the public servants contribute to their own superannuation, but they also pay the same rates of income tax as other people. The Commonwealth public servant, in effect, pays twice. He pays into the superannuation fund, and he pays income tax. So, there is every reason why the Government should treat superannuation pensioners more generously than they are being treated, because their standard of living is being affected. In considering this measure, we ought to have regard to the existing superannuation pensioner rather than to the present contributor to the superannuation fund.

I wonder why the Government has taken no notice of the submissions of the Joint Council of Public Service Organizations, the Commonwealth Public Service Board and the Superannuation Board in regard to an increase in the value of the superannuation unit. The Joint Council was established many years ago for the purpose of studying matters of common interest to various Public Service organizations. In August, 1957, it recommended to the Government an increase of the superannuation unit from 17s. 6d. to 20s. I am certain that that body would have given very deep consideration to the matter before making such a recommendation. The Labour Party thought so much of this recommendation that it incorporated the suggestion in its last policy speech, and undertook that if returned to office it would increase the value of the unit from 17s. 6d. to 20s.

I shall show honorable members how buoyant the Superannuation Fund is by referring to the figures in the AuditorGeneral's report. I know that the Government is very generous in its treatment of the fund, and I do not complain about that. The fund has a great future, as is evidenced by its buoyant position. At 1st July, 1958, the amount in the fund was £56,114,755. Contributions by officers during the previous financial year amounted to £6,456,253 and the Commonwealth's contribution to £4,798,266. Interest on investments by the fund amounted to £2,620,416, making a total income for the year of £13,874,945. Pension payments from the fund in the year ended 30th June, 1958, amounted to £5,547,566 and lump sum payments to £895,518. Refunds, &c., accounted for £702,537. So the total payments from the fund amounted to £7,145,621 against an income of nearly £14,000,000. That is quite a substantial surplus. The balance in the fund at 30th June this year was £62,844,079.

Those figures indicate that the fund is very buoyant. It appears to me that its investments could possibly be improved. It is quite likely that in the next ten years the present investment by the fund will be more than doubled, and the interest receipts by the fund could rise from £2,600,000 to nearly £6,000,000. I think that the Government should consider this in relation to the recommendation that the superannuation unit be increased by 2s. 6d.

The number of contributors to the Superannuation Fund is increasing steadily.. In 1953-54 there were about 78,000 contributors. At 30th June last year the number had risen to 91,914. In the same period contributions increased from £3,700,000 to £5,400,000. We know that the Commonwealth Public Service will not stop growing. We are a young country, and the Public Service must expand, and the number of contributors to the Superannuation Fund will increase accordingly. So the fund has a great future. In the circumstances, the Government should have increased the unit in accordance with the recommendation I have mentioned.

I notice that the rate of interest being received by the fund on its investments is at a record level of £4 10s. 8d. per cent. The fund invests its money in Commonwealth Government loans and Commonwealth bonds, which are, of course, giltedged investments. Commonwealth public servants have suggested from time to time that some of the money in the fund be used for the building of homes for public servants. I do not know whether this proposal has ever been considered by the Government, but I think that its adoption would provide a wise form of investment, because a permanent Commonwealth public servant who needs a loan to build or buy a home is just as reliable an investment as a Com monwealth loan. Not only would adoption of such a scheme help to provide homes for people who need them in those days of housing shortages, but Commonwealth public servants would be delighted to be able to borrow money at 5 per cent, from the fund. As all honorable members know, many returned soldier public servants who are entitled to loans under the War Service Homes Act have had to wait for lengthy periods before getting them, and have had to obtain temporary finance from firms charging hire-purchase rates of interest, of 10 per cent, or more. Public servants in that position would be delighted to borrow from the fund some of their contributions, even at interest rates of 5 or 6 per cent., to enable them to build homes.

Mr Curtin - It would also curb the real estate sharks.

Mr COSTA - Yes, and the hire-purchase sharks as well.

Let me now refer to the provisions regarding pensions for widows. Public Service associations have been arguing for many years that an amount equal to half of the pension paid to the contributor himself was not good enough for a widow. At last it seems that this proposition has been accepted, and the proportion is being increased from one-half to five-eighths. I believe, as we have suggested in our amendment, that this provision should be made retrospective to 1st July in the case of existing pensions being received by widows.

There is one other point regarding these increased widows' pensions to which I wish to refer. A contributor who wants to ensure that his wife will receive the benefit of the increased pension if she survives him will have to pay increased contributions. I do not complain about that; in fact, I think it is a provision that may even improve the fund. What I do not like is the fact that it is not compulsory for a contributor to increase his subscriptions. The contributor will have six months in which to make up his mind whether he will increase the provision for his wife. I believe that every contributor should be made to increase his contributions under this provision.

Mr Harold Holt - All new entrants will have to pay at the higher rate.

Mr COSTA - I think it should apply to existing contributors.

Mr Harold Holt - They will be given the option. We do not want to make it too difficult for those who may not wish to increase their contributions.

Mr COSTA - I realize that in these times, when every penny counts, the breadwinner hesitates to spend an extra two or three shillings, but I think, nevertheless, that it is a sound proposition to make this kind of provision compulsory.

I am pleased to see that the Government has improved the provisions relating to the Provident Account, which provides for lump sum payments to officers who, perhaps on medical grounds or for reasons of age, cannot become permanent. They are not eligible to contribute to the Superannuation Fund, but they may have the benefits of the Provident Account, which entitles them to a lump sum payment on their retirement. They contribute to this account at the rate of ls. for every £1 of their wages, and as their contributions accumulate interest is added at the rate of 3 per cent. I am pleased to see that this interest rate is being increased to 31 per cent. But if the lump sum payment, in the case of a single man, exceeds £2,250, that person is ineligible to receive the age pension. As I have said before, these superannuation contributions save the Government considerable sums of money in social services, and for that reason it should show more generosity to the persons who contribute to superannuation funds.

I am pleased to see that provision has been made to increase the number of reserve units that may be held by a contributor. This is something that I have always advocated. The maximum number has been increased from four to eight. Every young man who goes into the Commonwealth Public Service has. I am sure, an ambition to make progress. In my opinion all these young people would be wise to invest in the maximum number of reserve units available. In many cases it is better to have money in this fund than in the bank. If a person is promoted and has to take extra superannuation units, he can draw on his reserve units and continue to pay for them at the cheaper rate. This represents an excellent investment for young officers, and I am pleased to see that the provision has been made more liberal.

I think I have submitted substantial1, reasons why the value of the unit shouldbe increased. The important point to beremembered in administering a fund of this kind is that the pensioner should get something out of it. At the present time the: pensioner is getting nothing substantial out of it at all. I support the provision in the bill for increasing the amount payable to a widow. In fact, I support all the good features of the bill, but I believe that many provisions have been omitted that should have been included. I think that the unions, the Superannuation Board and the Public Service Board should have a look at the administration of this fund and se: how it can be improved. I believe the Commonwealth public servant would not mind increasing his contribution in order to ensure an adequate pension on retirement. I am not in favour of increasing charges as a general rule, but I think that this fund should be investigated, because it is possible that agreement could be reached on various ways in which the fund could be improved. The amount of money in the fund is substantial, and it appears to have a very good future, and, as I have said, the contributors save the Government many millions of pounds in social service payments.

I have given many reasons why the fund could be improved and why the amendment moved by the Deputy Leader of the Opposition (Mr. Calwell) should be accepted.

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