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Tuesday, 15 May 1973
Page: 2122

Mr RIORDAN (Phillip) - At the outset I think it is appropriate to congratulate the Treasurer (Mr Crean) on grasping the nettle in the terribly important sphere of superannuation, whether in the Commonwealth field or elsewhere. Certainly this Bill deserves the support that apparently it is to get from all honourable members. The Commonwealth superannuation scheme currently suffers by comparison with very many other pension and superannuation schemes available to employees comparable to Commonwealth public servants. This is particularly true of a comparison with schemes provided for comparable employees of private organisations. Some private schemes are substantially more generous, particularly for senior executives. Of course, private and public companies make substantial tax savings through the operation of superannuation schemes and that is undoubtedly an incentive to them to introduce what in some cases are quite generous superannuation funds.

It should be remembered that at present the Commissioner of Taxation allows for income tax purposes up to $100,000 as being the norm from which superannuation schemes may be granted tax exemption. This of course is beyond the wildest dream of a Commonwealth employee. Such benefits will never come his way under the scheme as it presently stands. The honourable member for Berowra (Mr Edwards) complained about the cost of this amendment. Let me remind him that the cost pf justice is never cheap and if we are concerned about justice, then we are concerned about meeting the cost, whatever it is. The cost of this scheme would not have been great if previous governments over a long period of years had operated this Fund on a reasonable basis. In other words, if governments had been prepared to make a reasonable contribution into the Fund at the time the employees were contributing to the Fund, in the same way as other employers do, much of the present difficulty would have been avoided. The honourable member for Berowra also complained about the likelihood, as he put it, of this provision becoming a pacesetter for other superannuation funds. I certainly hope that he is correct in his fears and in his prediction because this is a highly desirable objective.

It is apparent that the Commonwealth scheme was never designed to meet the severe inflationary pressures that we have experienced in recent years. The contributions required at present of employees to enable them to receive a reasonable pension can be very high. The normal thing is for officers to be paying about 10 per cent of salary in order to achieve benefits which are inferior to those obtainable by persons outside the Public Service on the payment of 5 per cent of their salary. Plenty of examples are available to illustrate this point. I will not weary the House by citing them tonight but it is sufficient to say that large companies and large government authorities have schemes which operate on the basis of employer and employee contributions at the time, and return significantly greater benefits than those which are paid to Commonwealth employees, and the employees concerned pay a lower contribution. Therefore, some public servants are required to pay a substantially higher percentage of their income for an inferior result.

The position now is that the Commonwealth superannuation scheme is adjusted on an irregular basis, almost on the basis of the political whim of the Government of the day. It is done on the basis of a notional salary being adjusted at irregular intervals and related to the position occupied by the officer prior to retirement. Under this Bill, a new scheme has been devised. Each retired person will have his superannuation payment adjusted each year. The basis of 1.4 per cent times the increase shown in the consumer price index is, indeed, a modest adjustment. In some ways, it is inferior to the other scheme. The advantage, of course, is that this adjustment will be carried out every year. If this had been done over the last 10 years, many people who were forced to live almost in a state of poverty - they were the recipients of lower superannuation benefits - certainly would have been much better off.

The public servant is in no specially privileged position in regard to superannuation. Public servants pay very heavily indeed for the benefits that they receive. In many cases, they pay substantially more than the maximum allowable taxation deduction. So, in effect, they are paying tax on part of the amount which they are contributing to this scheme. Generally speaking, this is not the case outside the Public Service. Many who have paid heavily and made substantial sacrifices during their working lives have found that inflation has robbed them of any substantial benefits and has certainly robbed them of the benefit that they expected when they were contributing to this Fund.

Superannuation has been an area of complete neglect by previous governments. Indeed, one would be tempted to say that adjustments to superannuation payments have been on the basis of seeking to gain political advantage. This Government, in introducing legislation which has the support of all sections of this House, is putting this question - yet another question - beyond the area of the political football match. Of course, there would be hundreds of thousands of citizens outside the Public Service - those who are over retiring age and those who are approaching retiring age - who will be watching the concept contained in this Bill with great interest.

The matter of Commonwealth superannuation presently is under review, as is the matter of superannuation generally. It is well for us to realise that today the number of persons who are in some form of superannuation scheme has risen to about one-half the total work force. One of the many factors which needs to be taken into account when designing a new scheme is the likely possibility of a reduced working life being considered desirable before any further review of a substantial nature is undertaken. Mechanisation and the use of advanced technology in the various aspects of Commonwealth enterprise is a fact of life. We can safely anticipate that it will continue at a rapid and consistently increasing rate. These changes are spread over a very wide area. Almost all functions of government are affected in some way or other. Inevitably, this will mean that much more work will be capable of being done in a substantially shorter time.

It is generally accepted that there will be a general reduction in hours of work as the needs of the community are able to be met with less effort by the community itself. This will be achieved in an earlier retiring age, as well as by generally reducing weekly and annual hours of work. Already significant numbers of Commonwealth officers and employees retire earlier than at age 65. Many are forced to retire earlier on account of poor health or some form of physical limitation. There are, of course, other factors which require Commonwealth employees to retire earlier than at age 65. We need a scheme which will be flexible enough to cater for future needs, including the provision of an adequate income during the retirement period. The Australian people generally no longer are prepared to accept the false notion that those who retire can be regarded as second class citizens with second class needs and, certainly, with second class benefits. This community has now reached the stage where it demands for those who retire the right to live in dignity and to spend their evening years with a reasonable standard of comfort. In my opinion, the community takes the view that those who contribute to wealth during their working life and who make possible the wealth to be distributed, are entitled to share in it when they find it convenient to call it a day in terms of their working life.

The erosion by inflation of the value of contributions made to superannuation schemes is a matter of critical importance in any scheme which is developed. It is a matter of critical importance whether it is a government scheme, a scheme set up by a private company for the privileged few of its directors or whether it is a scheme designed to cater for the most humble worker on the factory floor.

Erosion by inflation is the curse of superannuation schemes.

Professor Pollard in looking at the Commonwealth scheme has made a specific recommendation that the investment powers of the Commonwealth Superannuation Fund should be widened in order to meet this problem of inflation. Professor Pollard has made some suggestions which I have no doubt will be carefully considered. Of course, in my view, they are not necessarily the most desirable changes to adopt but nonetheless they are certainly entitled to careful consideration as alternative proposals which will be advanced to meet this problem. It is absolutely imperative for the successful operation of this Fund and of any other fund that it should be protected against the erosion of inflation. As one protects the Fund against inflation, so one protects the income of those who virtually have little opportunity to protect themselves. The retired employee must be entitled to feel secure after a lifetime of service and contribution. In my view, he is not entitled to suffer the fears and uncertainties that arise from inflation and the erosion of his income from a superannuation fund.

It would be inappropriate at this stage for me to discuss the many defects in the present scheme. The entire scheme presently is under review. This Government has shown that it has concern and real feeling for aged people everywhere. This Government has also shown, as the honourable member for Banks (Mr Martin) pointed out earlier, that it is prepared to move speedily in respect of Commonwealth employees superannuation. The honourable member for Mackellar (Mr Wentworth) confessed to the House earlier the shortcomings of the previous Government in terms of its acting speedily in respect of this issue but, of course, there are many people in the community who could point out to him that there was nothing new or discriminatory in that attitude. The previous Government acted very slowly and hesitantly in regard to almost every problem which confronted it. This Government will take adequate steps to protect the savings of employees and the benefits flowing to them from their superannuation or pension scheme. This Bill gives effect to the recommendation by Professor Pollard for annual review of the payments from this fund. It is interesting to note that Professor Pollard's report indicates that public service salaries are not increasing as quickly as average weekly earnings. This, of course, denies categorically the allegations which are being made that Australian public servants are enjoying some kind of a bonanza at present. It is well for public servants to realise the source of these allegations and how ill informed they are. The fact that future adjustments are to be made in accordance with movements in the consumer price index is not as beneficial in some ways as the old system, but it is a substantial improvement on the time gap which was involved in the old method.

Under the new provisions superannuation payments will be maintained at the current level of purchasing power. This in itself gives a great feeling of security and indeed is a strong measure of justice. Inflation will no longer erode the real value of payments. It is hoped that this scheme will be taken up by the trustees and controllers of other funds in both State and local government and in private employment. Therefore this measure is a most significant step forward. It will have widespread support throughout the community as a whole. 1 believe that the Treasurer, in introducing this measure, deserves the highest commendation both of this Parliament and of the community generally. He will certainly have the gratitude of retired Commonwealth public servants and in my view will receive commendation from the mass of retired persons generally who depend on superannuation as their means of livelihood.

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