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Wednesday, 27 June 2001
Page: 28744


Mr ANDREN (6:08 PM) —I want to start my contribution to this debate on the Parliamentary Contributory Superannuation Amendment Bill 2001 by dispelling some of the myths that have been run by people inside and outside this place about the scheme itself and my interest in it. Myth 1 is that it is all right for Andren to argue for the parliamentary super scheme to be reformed because he is rich. Wrong. If only it were true. As my declaration of interests show, I own one modest house in Narooma and have another fully mortgaged in Millthorpe, near Orange, where I live. Other than these properties, my only other significant assets are superannuation from my previous employment—due to a divorce settlement, that amounts to around $70,000—and, like everyone else in this place, my superannuation entitlement under the parliamentary superannuation scheme, which is worth at the moment about $50,000.

Myth 2 is that, in campaigning on this issue, I have sought to denigrate politicians and the political institution itself. False. My interest in reform of the parliamentary scheme has been driven solely and purely by a strong conviction that, without complete transparency and accountability in the whole system of parliamentary entitlements and allowances, we cannot hope to start the process of rebuilding public faith in our political system. We, as law makers, cannot talk about broader reform of superannuation in this country until we reform our own house, but not just in an ad hoc, reactionary, piecemeal way as this bill proposes. I have publicly acknowledged how hard the majority of parliamentarians—at least in this place—work: the long hours, the time away from families, the lack of weekends, et cetera. I have repeatedly stated that I have no problem with MPs being paid properly, although I have to say that some in this place have not done themselves much credit through claims, for example, that they are paid only $8.50 an hour. On my calculation, for the member in question that works out at about 250 hours a week. While in my view the current backbench salary along with its fringe benefits is adequate, if we have to, let us have that debate about what a politician is worth. All I have argued all along is that parliamentarians should have the same superannuation arrangements as apply to the rest of the community. By `same' I mean not just access age but in the size of the employer contribution and coverage under the superannuation guarantee.

Myth 3 is that my private member's bill is a cheap political stunt. Wrong. I do not need stunts to represent my electorate of Calare. In seeking to give MPs the freedom to opt out of the parliamentary scheme, I have sought to do little more than implement one of the recommendations from the 1997 report of the Senate Select Committee on Superannuation. Government members of that committee recommended, among other things, that upon taking office new parliamentarians should be offered the choice of opting out in favour of a fully funded accumulation scheme or retirement savings account of their choice. My bill went just one step further: to provide choice to current members too.

Regarding the issue of choice of superannuation, Mr Deputy Speaker, I draw your attention to page 197 of Budget Paper No. 2. It details how over the next two years the government will allocate $14 million for an education and communications campaign to promote its choice of super fund policy for the wider community. As the Minister for Financial Services and Regulation said when introducing the government's choice of fund legislation into this place on 12 November 1998:

The choice of fund arrangements are about giving employees greater choice and control over their superannuation savings, which in turn will give them greater sense of ownership of these savings.

... ... ...

The fundamentals of this reform are that employees get a genuine choice as to which fund their superannuation is paid.

Clearly, with freedom of choice so basic to this government's policies in fields such as health, education, union membership and indeed superannuation for the wider community, there should also be freedom of choice in MPs' super. Besides addressing the obvious hypocrisy and double standards in this differential treatment, from a personal level I want to opt out because I consider the scheme fails the tests of equity, fairness, transparency and compatibility with community standards.

This bill does nothing to address these concerns. Until the scheme is reformed, how can any of us look constituents in the eye whenever the issue of broader superannuation reform is raised. Indeed, how can any of us look in the eye those people who contact us for help with accessing a portion of their super early due to a financial, medical or some other emergency.

Myth 4 is that the contributions are not generous. Some in this place have argued that the parliamentary super scheme is not generous by community standards. For example, the member for Barker on 5 June emailed one concerned constituent to say:

There is a lot of nonsense put in the papers and the media about superannuation including the fallacy about $65,000 per annum in entitlements from the taxpayer.

The member for Barker and many others in this place I can only suspect have not read the trust's 1999-2000 annual report or have not taken any notice of the superannuation surcharge notifications that they will have received. If they had, they would know that the trust report states, among other things:

The Scheme is unfunded, members contributions are paid into Consolidated Revenue and benefits are paid from Consolidated Revenue. The Employer Cost of the Scheme was 69.4%.

That is up from 69.1 per cent in 1996. On page 2 it gives a cameo of how a member's surchargeable contribution is calculated:

A Male Backbencher age 45 years, with seven years service at 30 June 2000.

Salary $85,500.

That figure is now $92,000.

Commenced service 1 July 1993.

Notional Employer Contribution 71.1 % percent of salary or $60,790.

That is what the cameo says. That is an effective employer contribution for that member of over $60,000, and the base salary is now $6,500 more and will go up again by around $3,000 with the next indexation. The report also says, however, that the effective employer contribution may be as high as 89 per cent of salary but for long-serving members who have qualified it may be closer to zero. To put that into perspective, new members receive a notional employer contribution of up to 89 per cent, while the majority of the rest of the work force receives eight per cent under the superannuation guarantee. So much for `a lot of nonsense'. Even long-serving members gain the eventual benefits of the scheme's generosity. To argue otherwise is certainly a nonsense.

Myth 5 is that my views on this issue are somehow compromised because of my age. This one has been run by members such as the member for Dawson and at least one initial member of the PM's backbench committee, the member for Blair. Interestingly, I note that three of the member for Blair's colleagues on that committee are over 55. I guess the same applies to them also. The fact is that my age has nothing to do with this argument whatsoever. I do not qualify for a parliamentary pension unless I am fortunate enough to be re-elected by the people of Calare later this year and then lose in the election after next or unless I continue to be re-elected and voluntarily retire after 12 years. I intend to see the scheme reformed, opt out or get out before I qualify. The scheme as it stands eventually disqualifies those who oppose it from continuing in politics, and given that they are invariably Independents there are no tears shed by government or opposition.

Myth 6 is that if you pay peanuts you get monkeys, another one of the tired arguments run by the government against more comprehensive reform. I recall one National Party member last week claiming that without a generous super scheme the party would have difficulty attracting nurses, teachers and sales reps, for example. Excuse me, but I cannot think of too many teachers, on their salary of around $50,000, with an interest in politics not having a go because of the inadequacy of a backbench salary of $92,000 and rising, with all the other benefits. We are all volunteers in this place, and for most money is not—or should not be—an issue at all. If you are going into this business for the money, you are doing it for the wrong reason. In fact, I have just advertised for a position in my office with a salary of $35,000 and was inundated with applications from people with excellent qualifications, many of whom willing to take a pay cut to make a difference at that level. This whole argument is a furphy—and, besides, there is a simple enough solution: pay MPs what they are worth up front, and pay their super under the guarantee legislation. One of my amendments refers to that solution, yet it has already been flagged, without any explanation, that there is absolutely no interest in them.

Myth 7 is that the Remuneration Tribunal should determine MPs' super. This is the ALP's line to try to deflect responsibility and attention from the issue. The problem is that the tribunal has already ruled on the MPs' super scheme and found it to be fine. In its December 1999 report on MPs' pay, the tribunal concluded that it was satisfied that the remuneration package for senators and members—salary, superannuation and vehicle—was competitive. This is half of the submissions so far to the inquiry into the private member's bill on opting out of the superannuation scheme. Over 3,000 submissions have been put in for that, and there is a hearing due in Sydney on 11 July. This legislation will pre-empt that. Again, one of my recommendations is that we defer this debate until we have the results of that inquiry. The ALP still thinks the Remuneration Tribunal is the appropriate body to determine MPs' super arrangements. And the government, with this bill, asks the very body which says the scheme as it currently stands is fine to determine a redundancy package for MPs.

Myth 8 is that MPs need a special redundancy package because of the unique insecurities of political life. In responding to this one, I will defer to the words of the member for Werriwa, who said in the Main Committee on 2 November 2000:

Parliamentary superannuation as a generous entitlement made sense when we alone in the community faced job insecurity. But now, in the new economy, job insecurity is all over the place. There is hardly an Australian who feels secure in their workplace.

That argument applies equally to redundancies for MPs who lose or leave office prior to becoming entitled to a pension. Clearly, parliamentarians should be treated no differently in terms of redundancies from the rest of the work force. The other point which exposes the hypocrisy of this redundancy argument is the differential treatment of MPs' staff. Political staff face the same, and perhaps more, insecurities as their masters. If there is to be a redundancy package for MPs, it should be no more generous than those their staff receive. The scheme already pays a generous Commonwealth supplement to MPs who lose or leave office. A member who leaves voluntarily is entitled to all of their contributions plus one and one-sixth of this amount. A member who loses office is entitled to their contributions plus a supplement of two and one-third of those contributions. This call for a redundancy package is really about allowing the major parties to get rid of political dead wood. The current scheme has allowed them to do that very well, by allowing MPs to leave quietly with their payout if they do not perform or if someone better comes along.

Having dealt with the myths that have been injected into the debate by those who want to stay with the status quo, I now turn to the bill currently before the House. I believe it is deceitful, and it will not have my support, because it fails to recognise the unconscionable generosity of the scheme. All this bill does is require we as politicians and representatives of the people to drive on the same side of the road as the people; it does not attend to the generosity. The bill's explanatory memorandum says it all. It says:

It is estimated ... the deferral of ... pensions for new Senators and Members to age 55 ... will have a small positive effect on the fiscal balance—

up to only—

... $0.50 million in 2004/05).

The generous payments have been deferred, the employer contribution has not been changed and the bill does nothing whatsoever to make the scheme transparent or provide members with choice. In addition, it is a nonsense to exclude current MPs from the preservation age. The minister talks of `arrangements made by members'. I ask him what arrangements can possibly have been made by anyone beyond the next election, unless they are retiring. The act is already dealing with the issue of early lump sum access by banning it for contributions made and entitlements accrued post 1 July 2001. I note here also that in the 1997 budget the government announced that the superannuation preservation age for the wider community would be increased from 55 to 60 on a phased-in basis, meaning that by 2025 the preservation age will be 60 years for anyone born after June 1964, with the age 60 preservation age being reduced by one year for each year that a person's birthday is before 1 July 1964.

This means that only those born before 1 July 1960 will have a preservation age of 55, yet the government is making it 55 for all new members of parliament. This grandfathering, as it is called, is all set out in regulation 6.01 of the Superannuation Industry Supervision Regulations 1994. In the consideration in detail stage I will be asking the minister to explain the logic and consistency of this differential, which will only get worse over time.

Under this bill there will still be employer contributions from the Commonwealth up to 89 per cent and averaging 69 per cent of current MPs' pays. The Prime Minister and Leader of the Opposition are constantly asking for credibility, yet all sides have twisted and dived on this issue for years. The Prime Minister went to Aston and said:

More and more people in Australia are looking to have representatives who resonate and connect with their local communities.

What he failed to say is that at heart they want the law-makers, their representatives, to have the same superannuation rules as they do.

How can you blame, for example, the father who came to my office last year seeking assistance in getting early access to his superannuation to help him pay for the funeral and other expenses arising from the suicide death of his teenage son for having lost faith in the system? My staff and I tried to help him as much as we could. We were able to get a release of some funds, but still not enough, and he gave up in anger and frustration. I recall in the end that he just could not face providing the faceless bureaucrats with additional hard evidence of funeral related expenses or accepting that his credit situation with the bank was critical. Who could blame him? I have not put that case away. We want to revisit it. At this stage it seems that he has gone as far as he can go with the amount that he has been given access to. With cases like that repeated across the country, it is easy to see why voters get disillusioned when they realise not only the different standards regarding politicians but the inherent generosity of the scheme, or when they voice their concerns to politicians and receive dismissive replies like some that I have noticed in answer to people who have requested information of members.

The bill, with its hasty introduction—I understand even before it was presented to the joint coalition party room—and lack of speakers betrays the lack of concern about this issue by those on both sides of politics. This is a quick fix—hopefully through the Senate and out of the way before the winter recess and before the Senate committee inquiry into the Parliamentary (Choice of Superannuation) Bill set down for hearings in Sydney on 11 July. I will be moving a second reading amendment which calls for debate on this bill to be deferred until after the Senate select committee completes and reports on the inquiry into the Parliamentary (Choice of Superannuation) Bill I introduced into this House. There have been well over 3,000 submissions from the public and interest groups, including the superannuation industry, pensioners and superannuants and ordinary people wanting to see a super scheme for MPs that is no different from that applying to the general community. To pre-empt that inquiry with this bill is an insult to this parliament and the people who have made those submissions.

In the consideration in detail stage of the debate, I will be moving three amendments providing for an independent inquiry separate from the Remuneration Tribunal to investigate the salaries and entitlements of MPs and ministers, that all sitting members be included under the preservation age principles of the bill and that the amendments contained in my choice of superannuation bill be included as amendments to this legislation. I do not expect those amendments to pass this place, but they will be introduced in the Senate. Until they are part of this legislation, I cannot support it. In the meantime, I formally move:

That all words after “That” be omitted with a view to substituting the following words:

“the second reading of the bill be deferred until after the Senate Select Committee on Superannuation and Financial Services has reported on its inquiry into the provisions of the Parliamentary (Choice of Superannuation Bill) 2001”.

I commend that amendment to the House, conscious that I do not have a seconder.


Mr DEPUTY SPEAKER (Mr Hawker)—Is the amendment seconded? There being no seconder, the amendment lapses. The question remains that this bill be read a second time.