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Thursday, 25 November 1993
Page: 3792


Senator WOODLEY (10.09 p.m.) —The Democrats have been urged to respond to the SIS bills by amending them. We have received a large number of complaints from disaffected public servants in Victoria who allege that the Kennett government is meddling in their super fund arrangements with a view to reducing benefits substantially. The number of complaints is very large and should not go without notice. In fact, the number of these complaints has been exceeded only by the correspondence which has been received by us on the introduction of the super guarantee charge.

  This level of concern is not surprising. Victorian public servants, like their New South Wales counterparts earlier this year, have had their superannuation scheme gutted by mean-fisted state governments. What is concerning us is that they have been able to thwart the basic employment contract law by ready access to legislation.

  Under the transfer arrangements between the old and the new Victorian superannuation schemes, I understand that existing members stand to lose up to 20 per cent of their accrued entitlements. The `voluntary' transfer to the new scheme is made compulsory by possible punitive increases in contributions of up to 160 per cent. This will have a serious impact on particular age groups. New employees, like those in New South Wales, will be entitled to only the minimum superannuation provided by the superannuation guarantee levy system. We are told that this has been done as part of an effort to reduce state indebtedness and unfunded liabilities.

  The Senate Select Committee on Superannuation has taken an active interest in the goings on in public sector superannuation. The third report of the committee, entitled Super and the financial system, resulted in the production of a seminal report on public sector superannuation across Australia highlighting two key areas: firstly, that the level of unfunded liabilities for public sector superannuation was increasing and in the near future would present government with severe funding problems; and, secondly, that there are differences in the level of employer contributions from one state to the next.

  I will give an example. The Rolls Royce of the scheme was the Defence Force retirement and death benefits scheme, which had a level of employer support of about 26 per cent. The FJ Holden of the scheme was found to be the new Victorian scheme, which is funded at 11.3 per cent. The report showed that the reorganisation of the Victorian scheme has already resulted in the reduction of the level of employer support from 21.5 per cent to 11.3 per cent. The New South Wales scheme was also reduced from 21.5 per cent to 14 per cent under the Wran government.

  Having regard to the seemingly low level of employer support in the Victorian scheme, we were somewhat surprised to hear that attempts were being made to further whittle away these benefits. I understand that the government is reducing benefits to rein in its public sector debt. The letters which I have received call on my party to legislate by way of amendments to the SIS bills to prevent a state government from reducing benefits by fiat.

  I can understand the concerns of those whose benefits have been, or will be, reduced. However, this parliament and the Commonwealth are not well placed to become involved in that dispute, in a legislative sense at least.

  Until the High Court decides otherwise, states are recognised as having a constitutional right to legislate on industrial relations matters affecting their employees. Whether they could reduce the level of benefits below the SGC minimum, however, is another matter. Our advice is that, as the SGC is a tax on employers who do not meet their minimum superannuation contributions, the Commonwealth could insist that states meet their obligations.

  The High Court decision last year in South Australia v. the Commonwealth provides some guidance as to the degree of protection that the states have over their employee superannuation fund arrangements. In that case, the Commonwealth was prohibited from imposing a tax on that state's superannuation funds as, under section 114 of the constitution, the tax was seen as a tax on state property.

  Commonwealth intervention to dictate to states that certain conditions above and beyond the SGC be maintained would be likely to suffer a similar fate. That is not to say that the Commonwealth should stand idly by while two of the country's largest employers restructure their superannuation arrangements to the detriment of hundreds of thousands of workers. The issue of Australia's $34.4 billion worth of unfunded public sector superannuation liabilities is a national problem, if only because more than half of that amount is, at present, part of the Commonwealth schemes.

  When the Senate superannuation committee looked at the issue, it recognised that a great deal more information was needed. It unanimously recommended that the Minister for Finance convene a national meeting of state finance ministers or treasurers to develop a plan of action for addressing the problem of unfunded liabilities. Unfortunately, since then, the Commonwealth has done nothing while two states have now reduced the superannuation entitlements of their employees, particularly their new employees.

  A coordinated approach to the problem of unfunded liabilities could at least ensure that unfortunate employees who find themselves subject to a capricious state government are not picked off and made to experience the unilateral withdrawal of hard-earned benefits. The problem of unfunded superannuation is also a part of a bigger state debt problem, which my colleague Senator Coulter has been investigating in the Australian Loans Council committee.

  That recommendation of the superannuation committee was made in October 1992—over a year ago! It is my understanding that government responses to Senate committee reports should be tabled within three months of the tabling of the committee report. It seems strange that the government response is now 10 months overdue. Perhaps the government could respond to the fourth, fifth, and sixth reports, which were also tabled over three months ago.

  Question resolved in the affirmative.