On the 16 August, I took part in a public meeting organized by SCOA and DFWA on the indexation of ComSuper and Defence pensions.
First, John Coleman and Les Bienkiewicz outlined the history and issues involved in the campaign. Then Senator Gary Humphries, Lin Hatfield Dodds and I spoke in turn on our ideas and our party positions. SCOA and DFWA acknowledged the support given to the campaign by local federal representatives, and I thank them for this.
Senator Humphries was able to speak of the commitment given by his party to improve the indexation for one section only of the Defence superannuants, those on DFRDB and DFRB pensions. Other Commonwealth superannuants, including Defence superannuants on MSBS pensions and all of those on CSS and PSS pensions will miss out. When asked about policy and a time frame for any extensions to other Commonwealth superannuants of the indexation changes, Senator Humphries admitted that there was no such timetable as the Coalition’s priority had to be to first get rid of the debt. This prompted the comment from the questioner that “by then we will all be dead”.
So it is very important that we press for action now.
I said that I did not agree that a changed indexation applying to only one section of Defence pensions was a fair solution, although of course they deserve it. But I agree with David Jamison and the DFWA that this “political football” with veterans should stop. I spoke of my disappointment at the Government’s acceptance of the Matthews Report and its recommendations, and of my determination to find a way around the Report to gain fair indexation and fair treatment of all Defence and ComSuper pensions.
Recommendation 4 of the Matthews Report gives us the green light to implement a new and fair indexation method, and we have asked the Australian Bureau of Statistics and the Department of Finance to advise of the provision of an Analytical Living Cost Index targeted to the needs of ComSuper and Defence pensioners.
As an interim and immediate measure, while this targeted ALCI is developed, we have proposed that the PBLCI which was introduced to improve indexation for the age pension, be added to the indexation calculations for Defence and ComSuper pensions.
Our second major proposal to improve and sustain the value of Defence and ComSuper pensions concerns the tax treatment of these pensions.
SCOA, in submissions to the Henry tax review, has shown that inequities exist in the tax treatment of these pensions when compared with the tax treatment of other pensions or annuities. We have forwarded SCOA’s suggestion that legislation be enacted to deem CSS and PSS defined benefit funds as taxed super funds, with the result that these pensions would be tax free.
A second option, as SCOA has advocated, would be to separate superannuation pensions from other income and to tax each separately. In this way the superannuation income would not have the effect of increasing to a higher level the marginal tax rate now applied.
In my advocacy to Government I have urged tax reform for Commonwealth superannuation pensions, and have forwarded SCOA’s options.
In continuing this campaign Mike Kelly and I have been joined by our new candidates for Canberra and Fraser, Gai Brodtmann and Andrew Leigh, who also attended yesterday’s meeting. We will continue to seek and to take the advice of SCOA, DFWA and ACPSRO.
We look forward to persuading a re-elected Labor Government and the new Minister of Finance to act quickly to make the reforms we all seek. At the time of publishing, the outcome of the election is still to be determined.
