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Wednesday, 16 September 2015
Page: 7022

Senator REYNOLDS (Western Australia) (16:15): I too rise to speak on Senator Lambie's matter of public importance and also to remind the Senate of my original objections to the bill in question. First of all, I again commend Senator Lambie on the intention behind the MPI and also the Defence Amendment (Fair Pay for Members of the ADF) Bill 2014. The intent reflected in the title is entirely laudable. Senator Lambie is absolutely a passionate advocate for past and present service personnel, but unfortunately the devil is always in the detail and it resides within this bill.

Unfortunately, despite the laudable title of this bill, the practical operation of this bill does precisely the opposite of what the title suggests it would achieve. If passed by the House of Representatives, this bill would result in a significant decrease not only to the base pay of ADF personnel but also to their service allowances and entitlements. It is for that reason alone that it is inconceivable to me why the ALP and the Greens would have voted for a bill that will have a significant decrease for Defence personnel from the current two per cent.

By way of a quick history, the government's move to increase the ADF pay offer from 1.5 per cent to two per cent since March this year has provided a higher pay increase for the ADF personnel than that provided for by Senator Lambie's bill. As I said, though my colleagues and I applaud Senator Lambie's intent, after the first decision—

Senator Lambie: CPI was 2.4 per cent! You are misleading the Senate!

Senator REYNOLDS: If Senator Lambie gives me time, I will explain exactly how, in great detail, this is a retrograde bill. Following the announcements, Mr Nikolic, I and other colleagues quietly but very persistently advocated to the minister and the Prime Minister that we thought the initial 1.5 per cent pay increase was insufficient. We also worked with them very hard to find where the additional $200 million would come from out of the Defence budget. Once we had done that and we had found the money, we also put another very persuasive argument to government about why this was equitable. The reason was that, under the last government—the Labor government—the wage increase of ADF uniformed personnel lagged behind those of the APS by 25 per cent. We believe, therefore, that this recommendation was not only appropriate but that we had found the money to pay for it. Subsequently, on 4 March, the Prime Minister announced the government's intention to seek a variation to the ADF Workplace Remuneration Arrangement—the WRA—to provide an increase to the pay to two per cent per annum each year over the three-year life of the arrangement. The cost of the existing WRA is $634 million over the life of the agreement, and, as I said, the increase was an extra $200 million that has now gone to our ADF personnel.

The DFRT endorsed the government's new proposal when it handed down its determination on 9 June 2015 and the additional increase was reflected in ADF pay packets from 30 July and it was backdated to 12 March this year. Importantly, the DFRT decision kept ADF pay well above the current annual inflation rate of 1.5 per cent, which, in fact, as we have just heard from the speakers opposite, is what ADF pay would drop to under Senator Lambie's bill—not two per cent but 1.5 per cent.

There are three major reasons why I believe this is a very well-intentioned but ill-drafted bill and it would have devastating consequences on the incomes of our Defence Force personnel. The first reason is the linking of pay rises for members of the ADF to one of two things: either to CPI or to MP's salaries—option A or option B, and nothing else. Let's have a look at these options. Option A is tying it to politicians and senior public servants. The fundamental flaw in this is that we have all had our salaries frozen to zero, so option A that is proposed under the bill is zero. I am assuming that the drafter did not realise this when this bill was drafted. So, option A is zero per cent and is tied to politicians. Option B under the bill is tied to CPI, which, as we know from current CPI figures is well below the current two per cent. In fact, it is about 1.5 per cent. So it would be either option A or option B—zero per cent or 1.5 per cent.

Senator Lambie: Mr Acting Deputy President, I rise on a point of order. When this pay rise was disputed and done last November, the CPI was 2.4 per cent, so let's get some facts in here, please.

Senator REYNOLDS: That is not a point of order.

The ACTING DEPUTY PRESIDENT ( Senator Sterle ): Senator Reynolds, thank you very much for your assistance—

Senator REYNOLDS: That is a debating point.

The ACTING DEPUTY PRESIDENT: Senator Reynolds! I do not need your assistance. I have listened to Senator Lambie. I say to Senator Lambie that there is not a point of order. Senator Reynolds, ignore the interjections.

Senator REYNOLDS: We have option A—zero per cent—and we have option B, which is currently 1.5 per cent. The bill is very short and it is very clear, as has been confirmed by the speakers who preceded me. That is the first reason why it is a bad bill, because it will clearly reduce the salaries of ADF members.

The second reason I think this is a well-intentioned but bad bill is that under the bill the members of the ADF will have their pay assessed arbitrarily by the Minister for Defence under section 58B of the Defence Act. I argue for this reason alone that the entire premise of this bill is not correct. The Minister for Defence does not and should not make determinations on ADF pay. In fact, under the Defence Act the power is reserved specifically for the Defence Force Remuneration Tribunal—the DFRT—pursuant to section 58H(2)(a) of the Defence Act. Unlike what is said in the explanatory memorandum, the powers of the minister in relation to ADF remuneration of the Defence Act relate to determinations regarding conditions of service to ADF members other than salary—that is, not pay. In the past, these determinations have included housing benefits, relocation support, leave entitlements, the Abbott government's rollout of the National ADF Family Health Program and a range of other nonsalary related allowances.

In fact, the Hawke government, in the Defence Legislation Amendment Act 1984 established the Defence Force Remuneration Tribunal, which now comprises three independent members: the vice-president of Fair Work Australia, a person experienced in industrial relations matters and a person who has been a member of the ADF—a truly representative tribunal. This is a fundamental and critical fact that this bill has ignored and which I therefore believe actually renders it invalid. The DFRT determinations are to be made by already taking into account the special skills and capabilities required of ADF members and their unique employment circumstances. This bill, and the wording of it in relation to the tribunal and the minister would itself not only invalidate it but it would also effectively abolish the DFRT.

The third reason that this is a bad bill, well intentioned as it is, is that the definitions in it are far broader than just for the increase in pay rates. When you actually have a look at the Defence Act and you look at the tribunal details, it is very clear that this will not only apply to Defence pay but will also apply to all other meanings of 'salary'—all salary related payments and not just the base pay rate.

As I outlined in my speech on this bill, the proposed section 58ZC would introduce a mandatory formula into all Defence Force pay determinations, and not just those suggested in the bill. In making any salary determination the tribunal would need to include a calculation that converts any amount it decides upon into a percentage increase for the purposes of working out a minimum salary increase, using the new amount and rate of comparison as set out in the proposed new section 58ZC contained in this bill.

What does that actually mean? It is a bit bureaucratic and technical, but—

Senator Gallacher: Don't worry! We'll understand it!

Senator REYNOLDS: Thank you very much, Senator Gallacher, through you, Mr Acting Deputy President. Additionally, as the WRA also applies to relevant allowances determined by the tribunal, it includes service allowances, and there is no requirement to apply clause 58ZC to that part of ADF remuneration. Therefore, not only could the bill potentially cause additional distortions to the current ADF remuneration arrangements it would actually mean an effective decrease to 1.5 per cent—the current inflation rate—not only for ADF pay rates but for all their service allowances and other conditions of service. So when you look at the detail of this bill, it could reduce ADF pay rates from two per cent to 1.5 per cent and that would actually be across all the other thousands of conditions of service and entitlements.

While I absolutely support the intent of the bill—and I know that Senator Lambie has put it forward with absolutely the best intentions to look after our service personnel—when you actually have a look at the detail of this bill it absolutely has the opposite intent to what she intended—absolutely. It was for those reasons that I could not support the bill then and I cannot support it now. I would urge those opposite, before they continue to ask for this to be debated in the House of Representatives, to actually go back and have a look at the implications of this bill, because it is very clear when you look at the bill, the relevant act and the DFRT guidelines that this would, if passed in the House of Representatives, send our ADF pay back from two per cent to 1.5 per cent and take all of their service allowances and conditions with it.

It is for those reasons that I support the intent of this MPI and the bill that sits behind it, but it is absolutely a most retrograde step for all our men and women in uniform. Thank you very much.