SENATOR FIELDING ON VETERANS & FED GOVT REVIEW OF PENSION INDEXATION ARRANGEMENTS IN COMSUPER SCHEMES
Wednesday, 18 November 2009

Extract from Hansard Senate Proceedings on 18 November 2009

Australian Defence Force
Senator FIELDING
(Victoria—Leader of the Family First Party) (7.11 pm)

— Last week on Remembrance Day we stood for a minute’s silence to remember those Australians who died fighting to protect the values and freedoms which we so dearly cherish. The soldiers we remembered were brave individuals who each made the biggest sacrifice one can ever make: the sacrifice of their own lives for the sake of their country. Each day, thousands of Australian men and women put themselves in harm’s way and put their lives at risk to keep us safe and secure. It is just another reason why service in the Australian defence forces is not just some kind of ordinary job but a unique service which deserves special recognition as well as our full support and respect.

I was speaking recently with David Jamison, the National President of the Defence Force Welfare Association, and he had something to say that struck a real chord with me. He said that service in the ADF was unique because when you sign up to the ADF you effectively sign away your human rights. For example, when you sign up to the ADF, you give the state or the nation the authority to send you overseas into lethal situations where the outcome in extreme cases can be certain death. A soldier does not have the right to refuse a dangerous order that will put them in harm’s way. They must follow through with their orders, even when they know that this may mean they will never see their family or friends again.

It is an incredible situation to put yourself in and it takes incredible people to do this. And, therefore, given these circumstances and the uniqueness of this, we as a society have an obligation to provide the members of the ADF with special benefits above and beyond what would ordinarily be provided to others. However, now it seems that we are doing the exact opposite of this; and nowhere is this more evident than in the case of the military superannuation pension schemes.

The Rudd government likes to say the right things and acknowledge that service in the ADF is unique, but, quite frankly, for a long time both sides of parliament have paid lip-service to many veterans’ issues.

Only recently we had the Matthews review, which looked at the pension indexation arrangements in the Australian government civilian and military superannuation schemes. There was much hope that this report would correct the failings of previous governments and recommend a more appropriate indexation arrangement for the following military superannuation pensions: the Defence Force Retirement Benefit Scheme, DFRB; the Defence Force Retirement and Death Benefit Scheme, DFRDB; and the Military Superannuation Benefits Scheme, MSBS. After all, this report was delivered to the Rudd government back in December 2008, and it was only tabled in parliament in September 2009. So there was much expectation that the government was working its way through the issues during this time.

At the moment the current indexation arrangements are hopelessly inadequate and condemn our military pensioners to fall further behind rising community income standards. The defence force and superannuation pensions are only indexed to CPI, which, as anyone can tell you, is not an accurate measure of the increases in cost-of-living expenses. This was even accepted by the Australian Bureau of Statistics, which said:

The CPI is not a purchasing power or cost-of-living measure. CPI is just a measure of changes in the price of a basket of goods and services and should not be used as the only measure to index the military pensions of our former servicemen and servicewomen.
This is an outdated way to index pension payments and must be fixed immediately because at the moment the true value of those military pensions is falling compared to rising incomes of the general population. Even the government has admitted that CPI is not an appropriate measure for indexing the pension and has reformed other government pensions which were previously indexed to the CPI.
This includes the age pension, the wife pension, the disability support pension, the widow’s pension parenting payment, the carer payment, the services pension, the partner service pension, the income support pension and the war widow’s pension.

In the 2008 budget the government recognised that many seniors were concerned that their cost of living may rise faster than the consumer price index and to address this concern the government announced:

… the Government will guarantee that the Age Pension will increase in line with the higher of the consumer price index, increases in male total average weekly earnings or the living cost index for age pensioner households. These arrangements will ensure that the Age Pension keeps pace with increases in prices and improvements in community living standards.

Why them and not our veterans?
Again, other parts of the community received greater attention than those who have willingly put themselves in harm’s way at the direction of successive Australian governments. These pension payments are now all linked to the average wage so that they do not slip below a certain percentage of any increase in the average wage. This method of indexation makes a lot more sense and it is ridiculous that the government is refusing to budge and do the same thing when it comes to military pensions.

The current indexation arrangements have meant that military superannuation pensions are 35 per cent lower than they would have been if they were linked to a wage based indexation, such as the male total average weekly earnings, 20 years ago. Thirty-five per cent works out to be an enormous amount of money and it would make a real difference to veterans. By not changing it, not only does it seriously erode the standard of living for people relying on these payments but it also sends a terrible message that this is the way the government treats those people who have given their all for Australia.

We are talking here about an issue of basic equity. It is about giving a fair go to those Australians who have put their lives on the line. Why should politicians have their superannuation payments indexed more generously than our veterans? Why should federal court judges have their pension payments indexed to the increases in judicial salaries but military personnel have their payments linked only to CPI? Why does the government believe veterans should be worse off compared to others! How does this possibly make any sense?

Clearly the sensible thing is for military superannuation pensions to keep pace with community income standards, so why is the government being so stubborn on this issue? This issue of proper indexation for military superannuation pensions has already been dealt with by numerous Senate inquiries and yet we still see no change whatsoever on this front.
Wednesday, 18 November 2009 SENATE 99
Even as recently as last year the Senate Standing Committee on Community Affairs concluded:
Commonwealth and Defence superannuation pensions should immediately be brought in line with other government pensions by indexing these to both CPI and Male Total Average Weekly Earnings.

What we do not want to see is another report or inquiry on this issue. Instead we want to see concrete action taken by the government to fix this disparity once and for all.

Back in 2007, the Labor Party promised to fix this issue if it were elected to government. The Labor Party, in a letter to the Defence Force Welfare Association, said the following:

Labor believes that defence superannuation is a vital factor in the nation’s ability to recruit and retain talented and capable people for the Australian Defence Force. It is also a key entitlement for ex-service personnel.
… … … there is clearly much more to be done to address a range of longstanding issues in defence’s superannuation. Issues of great concern to the defence and ex-service community include indexation …

It is now two years on and the thousands of people who depend upon their military superannuation pensions are still waiting. I know well that organisations such as the RSL, the Defence Force Welfare Association and the Australian Peacekeeper and Peacemaker Veterans’ Association have been batting hard on this issue and struggling to get their voices heard.


That is hardly the end of it. Veterans still have the same issue with the DFRDB scheme and those who want to commute their super to get a lump sum are having it calculated based on life tables from 1962 which results in a lower residual fortnightly payment than would be the case if up-to-date life tables were used. In fact, it gets even worse than that. DFRDB pension recipients who choose not to commute their lump sum have only that part of their pension that would have been paid if they had commuted indexed—that is, partial indexation. The government is robbing its exservice people by deducting more than they need to and then claiming that they cannot afford to do anything because they do not have the money.

The government needs to stop its penny pinching and give proper reward to the thousands of Australians who have served this country so loyally. Some people might think I am biased on this issue because I have a son who is currently serving in the Army, so I want to declare and make it perfectly clear that I certainly do have a personal interest in this debate. But my special interest is not as a father of a soldier; it is as an Australian citizen who actually gives a stuff about their fellow Australians giving tirelessly of themselves above and beyond the call of duty to protect me and my family. I hate seeing something in our system which I think is so blatantly wrong, and this issue relating to the indexation of the military superannuation pension is one of those issues, especially when Labor has basically said they will do something about it. Let’s put aside party politics and penny pinching and give our defence personnel.