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Thursday, 27 June 1996
Page: 2347

Senator COOK(10.42 a.m.) —The opposition does not oppose the Parliamentary Contributory Superannuation Amendment Bill 1996. This bill arises because the government made a decision to change the salary structure for ministers. The legislation to have that effect has been passed in both chambers and it resulted in a reduction in salary for non-cabinet ministers of $10,000 per annum. This bill arises because there is a consequential change to pensions and to superannuation from the knock-on effect.

Given how superannuation operates for Commonwealth parliamentarians, the cutting of salaries of non-cabinet ministers has, as I said, a knock-on effect to the superannuation scheme. This affects people who are existing beneficiaries of that superannuation scheme—that is, people who are retired and in receipt of pensions—and it also affects the entitlements of serving members and senators.

The reduction would arise for current superannuants with non-cabinet ministerial experience, because the superannuants are paid with reference to their past service and to the current salary levels that are applicable to that service. Therefore, there would be a reduction in pension payments from the pre-2 May level. This reduction would continue until such time as, if ever, non-cabinet minister salaries increased to the pre-2 May level. Similarly, the value of superannuation entitlements of current members with non-cabinet ministerial experience would be reduced should they retire or die prior to the non-cabinet ministerial salary again returning to the 2 May level.

So the bill before the Senate proposes to insulate existing superannuants from the effects of salary reduction, basically, by maintaining current pension payments and by maintaining the value of the superannuation entitlements of existing members by ensuring that the formula remains as it previously was. That is a way of saying that there is a general principle here and that general principle, accepted by all governments, is that changes to superannuation should grandfather existing recipients. Adherence to that principle simply means that the rules should not be changed retrospectively to the detriment of superannuants. This legislation abides by that principle, and that is the reason the opposition will support it.

Due to the reduction in salaries of ministers not of cabinet rank, in effect there will be a minor saving. The reduction in costs as a consequence in 1996-97 in relation to existing pensioners would have been approximately $80,000, but that saving will erode over time as the salary of non-cabinet ministers increases. We support the legislation.