On 26 June 2008 the Minister for Superannuation and Corporate Law, Senator the Hon Nick Sherry, announced the implementation of the 2007 ALP election commitment to review the indexation arrangements for Australian Government superannuation pensions.
This review was necessary because the Howard Government and the Department of Finance would not make available relevant actuarial costings.
The review was led by Mr Trevor Matthews, an international leader in the global pensions and life insurance industry, an Australian citizen, past president of the Institute of Actuaries of Australia, and currently a prominent actuary in the United Kingdom. The review was tasked to consider and report on whether the current CPI pension indexation methodology in these schemes should be changed, having regard to:
- the occupational nature of those schemes;
- the form and value of the benefits payable under those schemes;
- indexation arrangements in similar defined benefit schemes in Australia;
- the interaction with government safety net benefits; and
- the full cost to the Commonwealth.
More than a hundred submissions to the Review included those from SCOA, ACPSRO, DFWA, the RSL, Veterans and Defence Services Council, the RSL, other Defence organisations, the Community and Public Sector Union, and the Department of Finance and Deregulation. A good many Commonwealth superannuants also made submissions.
Mr Matthew’s report was provided to the Government as scheduled at the end of 2008 and is currently under consideration. The Minister for Superannuation and Corporate Law, Senator Sherry, will announce the findings of the review and the Government’s response to those findings, once that consideration is completed.
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Why the delay in making the Matthews report public? I suggest that the Govt wants to put a campaign in place to discredit its findings rather than pay fair super to former Cwlth employees!
Minister Chris Bowen has just taken over the responsibility for Superannuation including ComSuper and Defence Force pensions and the Matthews report. His office may take a little time to get across all the issues involved in their new portfolio, but they have promised to keep us updated.
Recent email to the “new” replacement Minister, Chris Bowen and his “oppo” Chris Pearce…
Gentlepersons,
It would appear that you can be collectivised, as both major political groupings are now guilty of shafting Veterans and their families. You have achieved this by not just by ignorance nor by incompetence, but by hypocrisy and humbug. In Honest John’s time you obfuscated and overtly and covertly delayed the introduction into my parliament reports that were beneficial to our nations Armed Services and retired Armed Services community, and now this government caries guilt of the same measure over the Matthews Report.
I do hope you realise that this does have real impact on the current crop of well motivated but unknowing and overtrusting individuals who choose to bear arms for your foreign policy. For us, the disenchanted ex common soldiery, are your most effective tool in anti-recruiting, whereas our fathers and grandfathers were once our nations best tool for recruiting.
Our children and grandchildren, and any Australian person with whom we are in contact, are effectively prohibited by us from wearing the uniform we once so proudly wore in the belief that we would be honourably treated by our political masters and mistresses, even our “Command in Chief” (I urge you to become familiar with our Constitution). How else is it that we are able to crew effectively only two of our six submarines, even when offering to pay a cook $200,000pa?
You are both organic to this dismal picture of national defence. Matthews is stagnating and tiz time for an Australian Cromwell…
Sincerely,
Jim
Once a Sapper
08
Hi Jim,
Your comments are inline with my thinking. There are quite a few of us with similar thoughts. Unfortunately we are all acting indepently. We need organization to present a united front to politicians so we become a force for change.
Bob Richards
From chapter 1 of the F111 report:
F111 Report, tabled this day…
1.1 On 21 May 2008, the Minister for Veteran’s Affairs, the Hon Alan Griffin MP, wrote to the Chairman of the Joint Standing Committee for Foreign Affairs, Defence and Trade, Senator Michael Forshaw, noting that:
One of the election commitments of the Rudd Government was that it would conduct a Parliamentary Inquiry into the adequacy of the …health and support needs of RAAF Deseal/Reseal workers and their families.
May 2009 to June 2009 is 13 months.
So where is the bloody Matthews Report?
Promises, promises, procrastination….
Jim
Consie
I couldn’t agree with Bob Steins more. So now we have to give Lindsay Tanner and his staff time to study, understand and digest the Report. Come on!! Stop stalling for goodness sake!!! (Sorry for my exasperation but the Government has caused it.) Seems to me the issues are absolutely straight-forward and have been canvassed and discussed ad nauseum and to death. Is the Government interested in fairness and equity or is it not??? No more complicated than that. Lindsay, having been trodden on and bullied in school as he has informed all of us, should have great empathy with the down-trodden and under-dog. Let’s hope he grips the bull by the proverbial and makes a decision unlike his predecessors Sherry and Bowen. Procrastination is the strategy of the weak.
Michael
Consie
Re your comment posted three weeks ago on 16 June.
Any update to put us out of our misery? (From Bowen, Tanner or Combet or whoever it is the poisoned chalice is with. If they wish to play musical chairs or Russian roulette they should go do it in a corner by and with themselves and not involve us.)
Michael
Hi Michael,
Consie is away and back in the office next week. I’ve emailed her about your post (and she already is well aware that this is a very active conversation so will no doubt catch up on all the comments) and I’m sure she’ll respond to this directly as soon as she’s back.
Cheers,
Pia
Office of Senator Lundy
Now that the responsibility for Commonwealth and Defence superannuation has reverted to the Finance Minister instead of the Minister for Superannuation, can we expect to see a Government reply to the Matthews report very soon?
Joe
After sending a protest letter to Bowen after he took over the reponsibilities of Sherry, they forwared it on to Tanner’s office.I got a reply from Tanners office yesterday asking for my address; maybe they intend advising us officially soooooooooon?
I won’t hold my breath though.
My hopes are now that the new Parliamentary sitting from August 11th may see this issue furthered, at least by the release of the Report, but hopefully also by a Government response to the Report. So we are working on strategies to encourage this, and on gaining meetings with Mr Tanner’s staff. Thank you all for your representations and your support on this.
Thanks Consie for the first ray of hope we have had on this issue for quite some time.
Joe
I have now had a meeting with Mr Tanner’s staff, and have been assured that he wants to release the report very soon. Senator Lundy intends to place a Question on Notice which, hopefully, will move things along also.
Thanks Consie
Consie,
Thanks – many retired CSS pensioners feel shafted by what politicians of both sides have connived in for Age and Parliamentary pension adjustments. My sub branch includes many irate pensioners – can you get this through to Tanner. It will be a politically popular stimulus effort in many electorates, although I appreciate Tanner will cop heaps from Andrew Bolt, but isn’t that why ALP aspires to power and us grass roots members do hard yakka at election time??
Tanner can make stimulus case as well as equity case in that it is only a follow up to what has been done for Age pansioners a while ago.
J
I agree that the case for the change to indexation arrangements is strengthened by both the stimulus argument, and the case that has been made by John Coleman and the NATSEM report on the effect of ‘clawback’ factors. The NATSEM report can be accessed through the SCOA website.
Senate Question on Notice No. 2052
Senator Lundy: To ask the Minister representing the Minister for Finance and Deregulation — Given the large amount of mail and website comments received by senators asking when the report of the review of pension indexation arrangements in Australian Government civilian and military superannuation schemes (the Matthews report) will be released, when will: (a) the report be released; and (b)the government response be made.
OK so the question was asked on Aug 7….. When can we expect the answer???
Not sure if the question has actually been asked yet – I think it has simply been listed. When a question is actually asked in the House or the Senate the Minister or his representative would provide a reply straight away. As this is a Question on Notice the Minister or his representative cannot say “I will take it on notice”. So, there should be a response, even if it is “we are still considering the matter” or some such waffle or twaddle!!
Pia/Consie/Senator Lundy – can you enlighten us please???
Yes, we have had a reply today, but not the one we were hoping for! See below, and Senator Lundy’s comment on her webpage..
Comment on the Matthews Report, released today
Its Disappointing Recommendations
1: That pensions from the Australian Government civilian and military superannuation schemes continue to be indexed against the effects of inflationary price increases.
2: That the same indexation methodology continue to apply to all civilian and military pensions.
3: That pensions from the Australian Government civilian and military superannuation schemes continue to be indexed by the CPI as the most suitable index to protect pensions against inflationary price increases available at this time.
4: That, if a robust index which reflects the price inflation experience of superannuants better than the CPI becomes available in the future, the Australian Government should consider its use for indexing Australian Government civilian and military superannuation pensions.
The Report’s conclusions are listed as:
1. The occupational nature of the schemes does not provide a case for enhanced pension indexation
2. 2. The form and value of the benefits payable under the schemes do not support a case for change
3. Indexation arrangements in similar defined benefit schemes in Australia on the whole are not more generous than the indexation arrangements for civilian and military pensions
4. The interaction with government safety net benefits does not support a case for change
5. The full cost to the Commonwealth of changed indexation arrangements is high and would need to be justified.
The Government’s Response
The Rudd Government fully supports the findings and recommendations outlined in the Matthews report.
The Government has accepted the recommendation that pensions from the Australian Government civilian and military superannuation schemes continue to be indexed by the CPI. This is in line with the indexation of most other similar pensions in Australia, including all equivalent State Government schemes.
Comment
The report rejected arguments linking the changes to the indexation of the Age pension and other needs-based pensions or benefits with the case for changes to “occupation” or service-related schemes. “Age and Service Pensions and superannuation are two separate but supportive components of Australia’s retirement income system. However, they are different benefits provided for different purposes and are not comparable” [Section 8.4, p. 45].
The Matthews report has a section which notes the arguments of financial pressures faced by superannuants, but argues that civilian and military pensions are not based on needs, and it is not a feature of superannuation that it will provide an income that will be adequate in all circumstances [Section 6.11]
What are our options now?
This office will continue to work with SCOA in this campaign. We need to study the Matthews report in more detail. At first reading, my impression is that some of the assumptions on the costs of the proposed change to the method of indexation could be questioned. Informed comment on this aspect could be very helpful.
A new CPI?
Since the Matthews report was finalised in December 2008, the Australian Bureau of Statistics has developed a new Pensioner and Beneficiary Living Cost Index (PBLCI) in response to the Harmer Review. This will be used to index the base rate of age pension where it is higher than the CPI. The PBLCI aims to specifically reflect changes in the living costs of age pensioners and other carer and disability support recipient households.
At this stage, it appears that the PBLCI would not be a more appropriate index than the CPI for adjusting Australian Government civilian and military superannuation pensions. The Matthews report found that, in the long run, inflation for self-funded retirees is less than for age pensioner and, in the short term, could disadvantage retirees. Consequently, the recommendation was that the CPI should be retained as the basis for indexation, unless a better measure of changes in the cost of living for superannuants is found.
A long wait for no result, the more things change the more they stay the same.
I believe the Government should immediately accept Recommendation 4 of the Matthews report & Index Commonwealth & Military Superannuation pensions as per the method used to index the Age pension.
I agree with you Bert!
Alternatively, immediately implement Recommendations 2 & 3 and apply the same adjustment method to MPs super as well.
How can we even try to understand social injustices imposed by a Labor Government. As Dickens wrote: “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness— it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us—”
I think what upsets me most is that Lindsay Tanner has hidden behind the incorrect, immoral and unjust statement that change is not warranted “especially as it would come at a significant cost to the taxpayers”.
Joe Clark
The Coalition refused to index Service Pensions to MTAWE during the last election campaign. The Labor Party promised to do so. The Labor Party was elected. One would not suggest that the ex-service vote was wholly responsible but it must have helped.
If the Coalition promises (it must be a core promise!) to index DFRB/DFRDB etc to MTAWE, who will the ex-service community vote for at the next election?
Jim
“If the Coalition promises (it must be a core promise!) to index DFRB/DFRDB etc to MTAWE, who will the ex-service community vote for at the next election?”
Well this is a no-brainer for sure.
As a result of the Defence Force Retirement and Death Benefits Amendment (Fair Indexation) Bill not passing in the Senate, I understand many people are frustrated.
Throughout my advocacy on this issue I have made it clear that I am bound to vote with the Labor Caucus decision. Asserting that I personally held a deciding vote for this bill is incorrect and misleading.
For those interested, I explain Labor’s opposition to the bill in my Parliamentary Speech. In summary, this bill did not provide a sustainable, fair and funded solution to the inadequacy of CPI indexation. http://www.katelundy.com.au/2011/06/17/parliamentary-speech-on-the-defence-force-retirement-and-death-benefits-amendment-fair-indexation-bill/
I will write another blog post on this issue in the future, but due to recent inappropriate and threatening comments (which unfairly reflect on many passionate and constructive advocates for fair indexation) I am closing comments for the time being. Please read the code of conduct for my website if you are interested in what we are trying to achieve through the blog http://www.katelundy.com.au/website/
You can continue to contact me about this issue through my email address senator.lundy@aph.gov.au or write to me at 11 London Cct Canberra 2601 ACT.
I would like to thank those individuals and organisations who have worked with me on this issue to date. I will continue to campaign for an indexation system that reflects the cost of living, as I have for many years.