Tuesday, 15 October 2019

 Mr RICH-PHILLIPS (South Eastern Metropolitan) (16:19): I am pleased to rise to speak on the Superannuation Legislation Amendment Bill 2019 this afternoon, which is an important piece of legislation on an important subject. The bill makes a number of amendments to the Emergency Services Superannuation Scheme, which is of course the suite of state-run superannuation schemes which are administered by the Emergency Services Superannuation Board.

Of course the state of Victoria was one of the original providers of superannuation benefits to its workforce, long before there was universal superannuation across the entire workforce in Australia. In that sense the public sector in this state was something of a pioneer in providing those retirement benefits for public sector workers. Typically when the schemes were introduced those benefits were in the form of defined benefit (DB) entitlements, which varied depending on the nature of the work that the public sector employee was undertaking, whether it was related to emergency services or whether it was general public service.

Some of those schemes in fact dated from 1925. So there is a very long history with the provision of superannuation for the public sector in this state, now managed through the emergency services super board. As the prevalence of superannuation grew in Australia, we saw a number of changes to the way in which superannuation was provided and indeed we have seen a lot of change to the regulatory framework for superannuation. I will come to that in a little bit more detail shortly, but the purpose of this bill this afternoon is to make a number of specific amendments largely with respect to the emergency services super scheme as it applies to emergency services workers.

That is the only cohort within the Victorian public sector who remain on an open defined benefit scheme, being a scheme where the benefits payable to employees in their superannuation are typically related to their final salary as an employee, with the benefit typically being a multiple of the final salary they receive as an employee, as opposed to accumulation scheme super accounts, where typically a percentage of a worker’s income is paid into that superannuation account. They then get the benefit of that accrued payment into the account along with investment earnings. So for the accrual members, they have a defined amount paid into the scheme and they get the benefit of investment earnings. For the defined benefit recipients, they get a clear, defined payout, rather than a clearly defined pay-in.

In relation to the emergency services super scheme, which is a defined benefit scheme, the bill makes a number of amendments to the Emergency Services Superannuation Act 1986, which will provide that where a member of the emergency services defined benefit scheme, which is the ongoing DB scheme, have reached their maximum benefit multiple, the employer shall pay contributions to an accumulation account in respect of the employee at 3 per cent in the 2019–20 year, rising to 12 per cent by 2026–27. It provides that a member’s superable salary is maintained following a salary reduction, unless otherwise advised by the member; it provides that contributions payable for the financial year will be fixed and based upon the superable salary at the start of the financial year; it allows members to take a transition-to-retirement pension; it allows members on unpaid parental and carers leave to choose their level of contribution, and therefore the benefit that accrues to them; it provides members with the opportunity to make higher catch-up contributions; and it changes the method for calculating death benefits in respect of police recruits who do not have dependents.

The matters covered by the bill and the changes it makes to the emergency services scheme are of their nature very technical, and that is because superannuation legislation is very technical, particularly with the interplay of a state-based scheme enshrined in state legislation and the increasing overlay of commonwealth superannuation legislation. The changes in the bill are to the benefit of account holders in the emergency services DB scheme, and in fact the costs to budget in the short term of this scheme over the forward estimates are estimated at $11 million in the 2019–20 financial year and 2020–21 financial year, increasing to $19 million in the 2021–22 and 2022–23 financial years, and obviously we expect that to increase beyond that.

The changes do reflect the unique nature of a defined benefit superannuation scheme, in particular the first change that I outlined reflecting where members of the emergency services DB may have reached the maximum of their benefit by virtue of having reached a senior role at a senior salary in the emergency services. That has been the basis on which their defined benefit superannuation entitlement has been calculated. If, however, an employee in such a situation subsequently works in a reduced role, in a part-time capacity or at a reduced level, that would change the final salary for the purposes of determining their superannuation entitlement. That of course was never the intention of the scheme, and as such the bill ensures that their final salary is maintained for the purposes of calculating a defined benefit payout.

Likewise, the amendments also recognise the reality that where a member has maximised their entitlement under the defined benefit scheme and continue to work, they may seek to have superannuation payments made into an accumulation scheme so they can continue to accumulate a superannuation benefit, notwithstanding that the defined benefit that they are entitled to has reached its maximum. This again underscores the complexity that now exists in our superannuation system, where we do have a mix of defined benefit schemes—most of which have been closed to new entrants, bar the emergency services scheme—and we also have the accumulation scheme, which applies to the vast majority of public sector workforce.

It is worth noting that the emergency services super board is now administering some eight individual defined benefit superannuation schemes, being the Revised Scheme, which opened in 1975 and was closed in 1988; the New Scheme, which opened in 1988 and was closed to new members in 1993; the State Employees Retirement Benefit Scheme, which opened in 1980 and closed in 1988; the Transport Scheme, which opened in 1988 and closed in 1993 to new members; the original scheme, which opened in 1928 and was closed in 1975; the Metropolitan Transit Authority super scheme, which opened in 1984 and was closed in 1989; the Melbourne Water Corporation employees super scheme, which was opened between 1981 and 1987 and also closed in 1993; and then the emergency services scheme. Emergency Services & State Super (ESSS) also oversees the closed parliamentary scheme.

So we have got a number of different schemes with different entitlements which were in place at different points in time, the majority of which still have active members either in pension phase or accumulating benefits. Then we have, as I said, the ongoing emergency services open defined benefit scheme.

ESSS is now responsible for the management of some $30 billion of assets on behalf of state superannuants, with some $36 billion of liabilities as accounted for by ESSS, with roughly, in 2018, a $7 billion deficit between the assets and the liabilities that were owed to account holders under the defined benefits schemes.

It is worth noting that the way in which the liabilities of the portfolio of defined benefits super schemes are accounted for in the annual report of the ESSS is different to the way they are accounted for in the budget. Due to a different approach with the valuation of the liability, we actually get very different numbers between the liability recorded in the budget, which is based on a discount rate approaching the government bond rate, and the liability accounted for in the annual report of the super board, which is based on expected returns in valuing the liability. So you get very different numbers as to the total liability and very different numbers as to the deficit. The important thing, of course, is in a cash sense, the liability is still on track to be extinguished in the 2030 time frame, which has been a long-term, consistent goal across multiple governments in this state since the early 1990s.

The Emergency Services Superannuation Board has a complex job to do in managing the multiple defined benefit schemes and also in accounting for its responsibilities at a commonwealth level. One of the things that has been, I think, of increasing frustration to perhaps the entire workforce in Australia and particularly for those who administer some of the state schemes—some of the defined benefit schemes—has been the constant churn at a commonwealth level with superannuation legislation. The fact that a regulatory framework, which is supposed to provide for the long-term retirement benefits for all of the workforce in Australia, is something that is constantly being tinkered with by successive governments. It is something which should be providing a stable framework to allow people, whether they are in accumulation schemes or public sector defined benefit schemes, to plan for their long-term retirement future. The fact that successive commonwealth governments are constantly fiddling with entitlements, with contribution levels, with benefit caps, and that barely a year can go by without the commonwealth government fiddling yet again, really undermines the intent of superannuation as a concept and, frankly, undermines the capacity and ability of managers, such as the emergency services super board, to work in what is an already complex environment where you have the overlay of commonwealth legislation with schemes that are run by the state under state legislation.

There are a number of agreements between the state and the commonwealth, particularly as to the operation of the state schemes, because they are not technically subject to the commonwealth legislation but the members generally are. By agreement the state-administered state schemes established under state statute seek to operate within the framework that the commonwealth lays down, which is an incredibly complex thing to do when the commonwealth regulatory framework is largely geared towards accumulation products, and quite often changes are not put in place in a way that actually reflects the realities and the constraints of defined benefit schemes. Successive governments have encountered those challenges back over the last 20 years, when federal governments really started to fiddle with superannuation regulation. There have been numerous pieces of legislation that have been brought to this Parliament in order to amend the state defined benefit schemes in order to accommodate the latest thought from Canberra as to how superannuation should be taxed and regulated. This is an ongoing challenge for the administrators of the state super schemes and, frankly, for all Australians who have superannuation as a retirement benefit, given the commonwealth will not leave the framework alone.

The bill before the house is not in relation to commonwealth changes. It is in relation to the government’s determination to increase some of the entitlements for emergency services workers through the mechanisms which are in the bill. The coalition does not oppose this. This is relatively straightforward as to its intent, even if complex as to its mechanism. We understand the government will seek to make some amendments to this bill in respect of other superannuation matters that are overseen by the emergency services super board, and we will deal with those in due course. But we do not oppose this bill and expect it will have a speedy passage.

 Mr GEPP (Northern Victoria) (16:35): It is with great pleasure that I rise to speak on the Superannuation Legislation Amendment Bill 2019. Superannuation of course is a great Labor Party legacy to this nation. It has been the Labor Party that has driven the agenda on retirement income from every corner of this great nation. The bill before us today continues with those aspirations, long held by the Labor Party, to ensure that working people have the best retirement income schemes they can possibly have.

Before I get onto the terms of the bill I think it is probably worthwhile to just go back. Mr Rich-Phillips covered a little bit of ground in his contribution in terms of public sector superannuation here in this state, and I have touched on Labor’s values when it comes to retirement income. Of course the house would know that it was the Keating Labor government that made superannuation compulsory in 1992 with the Superannuation Guarantee (Administration) Act 1992, initially commencing at a rate of 3 per cent.

Mr Barton interjected.

Mr GEPP: Could you imagine having a superannuation rate of 3 per cent today, Mr Barton? I think it would be a very brave politician that would run that number up the flagpole today. But it had risen to 9 per cent by 2000. The aim was to have a superannuation rate of 12 per cent, but that was subsequently frozen by the then Howard government. Today, just to underscore the importance of the retirement superannuation scheme, some 1.9 million Australians over 65 are partly or fully self-funded retirees.

Could you imagine the drain on the public purse if that was not the case, if this enormous economic reform was not introduced almost 30 years ago? Interestingly the Association of Superannuation Funds of Australia state that in order to:

… have a ‘comfortable’ retirement, single people will need $545 000 in retirement savings, and couples will need $640 000.

Without Labor’s commitment to retirement income in this state and in this nation those sorts of numbers would not be available to working people across this nation. They would be simply out of reach. I have a number of quotes from members of the Liberal and National parties at the time that the debate was held in the federal Parliament, but it may well be a little bit churlish for me to repeat some of those statements because they were lost on nobody at the time—claims of mass unemployment permeating the country, that it was nothing more than a tax on business and that it would be the undoing of this nation. Of course none of that has proven to be the case; in fact quite the opposite. It is one of the great Labor economic legacies that this country, I predict, will have for many, many, many, many years to come and will only be improved. That is what this bill does today.

In February 2017 the government undertook to review certain aspects of the emergency services defined benefit scheme. It had terms of reference for that review, and they were: a review of design elements of the ESDB scheme, such as the maximum multiple; the calculation of death and disability benefits; the calculation of the resignation benefit; the feasibility of introducing a transition-to-retirement pension; and also a review of gender equity. Now, I will not run through all of the mechanics and differences of the accumulation systems vis-a-vis the defined benefits. Mr Rich-Phillips did that and explained that very eloquently. I suspect that many in the chamber understand the difference between those two schemes, but this is a particular scheme for, of course, our emergency service workers. This bill seeks to amend the Emergency Services Superannuation Act 1986 to improve the benefits provided to members of the ESDB scheme.

I should say at this point that arising from that review in 2017 the government during the election campaign made a commitment to support certain recommendations arising from that review, and this bill fulfils that commitment. It maintains faith with those workers about the changes that we said if we were re-elected we would make to this scheme upon the resumption of the new Parliament. This bill, as I said, keeps faith with that commitment, and in particular the reforms include that where a member of the ESDB scheme has reached the maximum benefit multiple the employer shall pay contributions to an accumulation account in respect of the employee at 3 per cent commencing in the 2019–20 year, rising to 12 per cent by 2026–27.

That is a particularly important point, because once you reached the maximum—and often that took around about 30 years, as I understand it—the only time your benefit then adjusted was in line with salary increases. Of course across this nation we are living in a time when there is very low salary growth, so this is a very important aspect of the reforms being proposed by the government to ensure that those workers are not leaving our emergency services early because there is no real retirement income benefit to them by remaining in that employment. We would have a mass exodus of experienced people out the door, but rather this ensures that there is a continued contribution that is made to their retirement income through an accumulation account that rises over the next few years. That is providing that a member’s superable salary is maintained following a salary reduction, unless otherwise advised by the member. Again, that is very, very important.

I talked about transition to retirement, and there can be other aspects of that transition to retirement—not just financial. When in a workplace a worker decides to take a different set of duties, or it might be different hours of work, that may have an impact overall on their salary. These reforms seek to maintain that salary level for the purposes of superannuation without their longer term retirement being impacted unnecessarily. The reforms also include that contributions payable for the financial year will be fixed and based upon the superable salary at the start of the financial year, allowing members, as I said, to take a transition-to-retirement pension.

The reforms will also include allowing members on unpaid parental and carers leave to choose the level of their contribution and subsequently their benefit accrual. It is most important. These changes actually recognise that the workplace is changing and that the circumstances that exist in the modern Victorian workplace are very different to those that existed at the time that this scheme was first enacted. It has been amended over time, and the reforms will also include the provision for members with the opportunity to make higher catch-up contributions.

It will also change the method of calculating the death benefits in respect of police recruits who do not have dependants. That is a particularly important point, because at the moment they are not eligible, but these reforms will ensure that that anomaly is removed and that police recruits will have the method of calculating death benefits for those without dependants. Those barriers are removed.

On paying additional accumulation contributions for certain members, at present ESDB scheme members can accrue a maximum benefit of 8.4 times their average salary. As I said, a member contributing at 7 per cent of their salary will reach this maximum after 30 years. The last thing that we want in our emergency services sector is a plethora of emergency services workers, because they have reached the maximum under the defined benefit scheme, exiting the workplace, because there really is no financial advantage for them remaining at work, and moving into retirement earlier than they otherwise would have. Of course the work and experience that we have amongst our emergency services workers is very, very valuable, and these reforms will assist those workers to perhaps remain in the workforce longer and continue to make the wonderful contribution that they make to this state, and it will allow for a scheme that will ensure that, financially, they continue to benefit from the retirement income.

Mr Rich-Phillips talked about some house amendments, and I will very quickly go over those. Others may wish to make a contribution on those as well. People will recall, of course, that the first determination of the Victorian Independent Remuneration Tribunal recently took effect in line with other reforms made by the Victorian Independent Remuneration Tribunal and Improving Parliamentary Standards Act 2019. It was passed by the Parliament earlier this year. Following this determination some inconsistencies have emerged in relation to the operation of the Parliamentary Contributory Superannuation Fund, and the bill as amended will remove those inconsistencies. It does so by inserting new definitions to clarify provisions dealing with the calculation of contributions to the fund, as well as benefits payable by the fund. The amendments will ensure that all relevant calculations are based on the basic salary portion amount that was determined by the independent remuneration tribunal specifically for the purposes of the fund. The amendments will preserve the previous superannuation arrangements for members of the fund while ensuring that there are no unintended windfall gains. This reflects the intention of the reforms to the fund passed by the Parliament earlier this year.

The bill as amended will also ensure that the provisions to fix the contributor’s contributions for a financial year and maintain a member’s salary for the purposes of the emergency services defined benefit scheme are operational from 1 July 2019. This is achieved by changing the commencement date of clause 4(5) to 1 July 2019 and making the consequential amendment to clause 3. The combined effect of these two amendments will ensure that all the proposals to improve the benefits of the members of the emergency services defined benefit scheme are operational in this financial year.

As I said, it was with great pleasure that I rose today to support this bill. Superannuation is in the DNA of the Australian Labor Party. It was the Australian Labor Party back in 1992 that introduced this most magnificent of economic reforms that will be a lasting legacy to not only Victorians but all of this nation, and you can think of no finer group of workers than emergency services workers, who put themselves on the line for our community every day. The improvements that I have outlined in this bill before the house today will ensure that those workers who give so much to this fantastic state receive something back by way of a better and well-supported retirement income scheme for emergency services workers in this state. I commend the bill to the house.

 Mr BARTON (Eastern Metropolitan) (16:49): I rise to speak on the Superannuation Legislation Amendment Bill 2019. I note that this bill makes a number of changes to provide for significant improvements to the superannuation benefits for Victoria’s emergency services workers. I commend the government for working to protect the rights and retirement of our hardworking emergency workers. We cannot pay them enough or provide enough benefits to compensate them for the work they do. Not everybody can do what they do.

In 1992 the Keating Labor government gave us the compulsory employer superannuation contribution scheme, and it has been a huge success. You will not find a stronger supporter of the scheme than I. Now, 27 years later, the Morrison Liberal-National government is conducting a review of Australia’s compulsory superannuation scheme. It is possibly time; however, I share others’ concerns regarding any delay in increasing the planned lifting of contributions or any winding back or reduction of this scheme. It is extremely concerning.

We in this Parliament are in a privileged position in regard to our own superannuation scheme. Twenty-seven years on from the Keating super plan we still have some workers falling through the cracks. Not everyone is lucky enough to have the same scheme as us. Some of our lowest paid and hardest workers have no superannuation. I want to make a comparison for the house with the Victorian taxi and hire car industry, who lost their superannuation—taken from them in the taxi and hire car reforms in 2017. I know the red team understands the importance of superannuation in the taxi industry. I would just like to remind the members on the red team what they had to say about the industry and their superannuation when they were in opposition only a few short years ago.

Minister Mikakos spoke in defence of taxi licences as superannuation investments in June 2013 in relation to the Transport Legislation Amendment (Foundation Taxi and Hire Car Reforms) Bill 2013, and I quote from Hansard:

Many licence owners bought their licences as an investment and, in many cases, to provide for their retirement income as self-funded retirees. They are concerned that the unrestricted access to taxi licences in the market will have a massive downward effect on the value of licences, thereby devastating not only the industry but their families as well. I am talking here about small business owners, many of whom are immigrants and some of whom have worked their entire lives to pay off their licences, only to have them now devalued. This was to be their super and their nest egg for their retirement, and in many cases it is their only source of income.

Minister Mikakos said that many licence owners bought their licences as an investment, and in many cases they provided retirement income for the self-funded retirees.

Mr Melhem acknowledged that taxi licences were superannuation during debates around the ridesharing bill in June 2016. I quote from Hansard:

There could be some sort of levy for a fund to be put in place to compensate these people, because for many of these people that is their pension—that is their retirement nest egg—and we definitely do not want to see them going to the wall.

Well, I can tell you that they have gone to the wall.

Minister Somyurek was quite clear during debate on the foundation reforms in 2013. I quote from Hansard of 25 June 2013:

The threshold question for the members of the government to consider before they vote on this bill—and they should have a think about this—is whether they would like their superannuation to be ripped out of their hands. Would they want the government to step in and take away their houses or their superannuation? Those are the threshold questions. Members opposite should decide which way they vote today by considering those questions.

Minister Somyurek spoke again in 2016 and said that the devaluation of the taxi industry was the equivalent of ‘taking our superannuation off us’. I quote from Hansard of 22 June 2016 during debate on the ridesharing bill:

The bill does not provide a level playing field across all industry participants. If the bill becomes law, thousands of Victorians could face bankruptcy. It would almost wipe out the value of existing taxi licences. It does not provide for any compensation or assistance and would financially ruin many families. A few years ago the taxi industry was deregulated. For a lot of Victorian small businesses—I guess they are microbusinesses; in particular I talk about the family or single licence-holders—the value of their asset was decimated overnight. It would be comparable—for those of us who are fortunate enough to have it—taking our superannuation off us. We have put some financial hardship provisions put in place, but without proper regulation of the ridesharing industry there will not be a level playing field, and the … lack of a level playing field would be further financial hardship placed on taxi owners.

He said it would be comparable to ‘taking our superannuation off us’.

Minister Wynne in the other place was a strong defender of the taxi industry during the foundation reforms:

… we unambiguously support fairness, and that is what government ought to be about. We say that the bill that is currently before this house is fundamentally flawed, and it is not fair. It is not fair to licence-holders and it is not fair to consumers. Indeed it is a flawed bill.

Minister Donnellan was very critical of the coalition government’s foundation reforms. I quote from Hansard of 26 June 2013, when the minister spoke on the foundation reforms:

Comrades, the Cold War is not over because tonight we see that communism is alive and well on the other side of the house. Rent is being set in this legislation, and assets of other people are being appropriated with no compensation. The wood ducks on the opposite side pretend they represent small business, yet they sit in this place and vote to destroy the value of taxi licences of hardworking individuals. What we have is a group of people who pretend on an ongoing basis that they are business friendly, but at the end of the day they sit like wood ducks and help the Minister for Public Transport destroy the value of taxi licences.

People have worked hard to build up their assets, but today the team opposite is about to destroy the value of those assets … You will wear this legislation like a crown of thorns on your heads, because at the end of the day people will remember what you have done.

I say to members on both sides—the red and blue teams—that you share that crown of thorns. We do remember what you have done, and that is why I stand before you today. I ask those current Labor members: when did these Victorian transport workers and their families become less worthy of their superannuation? At what point did the fairness that Minister Wynne spoke of no longer apply to the taxi industry? Perpetual taxi licences were seen as superannuation—in fact encouraged by Labor governments. They were held as collateral by banks and rolled into superannuation funds, and they served as a source of ongoing retirement income for those retired from the industry but able to lease out their licence for a fair ongoing income. Owning a taxi licence was superannuation.

Two years ago in 2017 the Andrews Labor government stripped the taxi industry of its licences—its superannuation—paying out arbitrary compensation and replacing them with a $50 permit. Banks, with that collateral now worth nothing, called in loans. Retirees, suddenly robbed of an income from their leased licences, were forced to sell their homes and apply for a pension. Self-managed super funds with taxi licences as their nest egg became worthless overnight. Those still working in the industry saw their secure retirement plans dissolve. I say these Victorian transport workers are worthy of having their superannuation and their retirement protected. They need and deserve their superannuation back. My colleague Mr Erdogan’s father was a taxi driver, and he is now a hire car operator. Their family is deserving.

I know that there are those in the red team who are sympathetic and admit that these reforms did not land as they should or could have. They tell me it is too late and we must move on. We cannot move on. They are broken people. It is never too late to do what is right. I apologise; I have digressed again. Today of course I will support the magnificent work of our emergency service workers, and of course I will support this bill. I commend this bill to the house.

 Ms SHING (Eastern Victoria) (16:58): I rise today to add my contribution to the Superannuation Legislation Amendment Bill 2019. At the outset I want to make a few remarks to reflect the general importance and the agreed significance across not just this place but also the Assembly in the course of debate of this particular bill. There are a few common elements across the two chambers—elements which span party divides, and appropriately so.

The first of these relates to a fundamental recognition of the value and the merit of the work undertaken by emergency services workers. I think it is important to indicate at the outset that that is well beyond the scope of any dispute in relation to any other subject matter in this bill or indeed the scope of the defined benefit schemes as they currently operate or as they are proposed to operate following what will hopefully be a successful passage of this bill. What we also note from the course of contributions, particularly in this chamber and from various parts of the chamber, is the fundamental recognition of the value of superannuation as retirement income.

We know that we are very much at a crossroads when it comes to an interjurisdictional approach to the way in which retirement income is captured, is maximised and is released—everything from the taxation treatment which applies to it through contributions and through drawdowns to the retirement income once the preservation age has been achieved, through to the way in which superannuation can be accessed and the quantum of contribution which applies not just through negotiations such as those which have been undertaken by emergency service unions here in Victoria way back to 1988 but through the advent of compulsory contributions to superannuation, which kicked in from 1992 as a consequence of Prime Minister Keating’s efforts to make sure that there could be a safety net for workers across the board once they transitioned into retirement.

It is important to note that this bill does in fact build on a suite of reforms that have come about because of significant examination of aspects of the emergency services defined benefit scheme. This includes the changes that will mean that there is no longer a penalty for long-serving employees within the emergency services sectors, which will otherwise impose a cap to make sure that contributions can continue after 30 years. It will also mean that there are transition to retirement provisions which do in fact facilitate the reality of the world in which we live now. We know that workers will need between 68 per cent and 80 per cent of their annual income once retired in order to enjoy a standard of living which is comparable to that which they had prior to ending their paid work. We also know that it is important to recognise changes which occurred to the fraction mode and nature of employment, including throughout periods of unpaid and paid parental leave, carers leave and other periods of absence from the workplace.

It is a subject that is very, very dear to my heart. I have had the privilege of working within the industry super fund sector and with the Australian Institute of Superannuation Trustees in previous lives. It has been a significant exercise in negotiation, in policy evaluation and in ongoing effort to make sure that retirement income is not chipped away at and that investment decisions are made in the best interests of beneficiaries as well as to ensure that we are achieving the ultimate ends of the superannuation scheme as it was originally intended—namely, to make sure that in the absence of access to an old age pension there is a reasonable safety net available for people which accumulates throughout the course of their working lives. We know that this fundamentally benefits women; we know that this fundamentally benefits people who are otherwise not able to access financial means, support or a safety net later in life; and we know that it makes a fundamental difference to the way in which people then seek to access welfare and welfare-related benefits. The bottom line is that these amendments go a long way to preserving and enshrining a level of equity for our emergency services workers as well as making a number of incidental changes to the way in which the review and the terms of reference for that review conducted in 2017 are given effect.

I would join with other members in commending the components of the bill that address emergency service worker inequities within the defined benefit schemes and the corresponding changes that will reduce inequity and improve access over time whilst also not penalising long-serving employees. I would also look to make sure, for avoidance of doubt and given recent discussions and decisions issued by the independent remuneration tribunal, that any unintended consequences do not crystallise in the way in which superannuation entitlements are carried forward and the way in which inconsistencies might otherwise have arisen.

There are a number of facets of the bill that deal with new definitions to clarify the way in which contributions to funds and payments payable by the fund are calculated and are determined. It is also important that we make sure that this harmonises with other statutes, both at a state and federal level, including to ensure that relevant calculations are based on the basic salary portion amount that was determined by the Victorian Independent Remuneration Tribunal, in particular for the purposes of the fund, as well as making sure that there is a preservation of previous superannuation arrangements for members of the fund whilst not then giving rise to an unintended consequence of a windfall, which was not as a net gain ever intended to be part of the scope or contemplation of the independent remuneration tribunal’s decision.

So the bill, as others have indicated, will ensure that the provisions to fix a contribution for a financial year take effect and that that occurs from 1 July, and making a commencement date unambiguous within the scope of the bill itself is an important part of achieving this end. Also, making sure that we have all proposals to improve the benefits of emergency service worker entitlements and the operation of that scheme to operate from this financial year is another important way to provide that certainty and those safeguards to workers within this particular sector who are members of the fund and access entitlements accordingly. There is a measure of balance and of careful consideration in this bill which clearly shows that there is a lot of work going on, at least in Victoria, to preserve consistency and to prevent inconsistency, ambiguity, windfall gains or inequity. To that end we do see that there are reforms in this bill that overall complement the objectives of providing that safety net.

One of the other things that I do want to touch on is the general importance of superannuation as it relates to contributions that can then be accessed in a way that does not constitute a penalty as workers head toward a transition to retirement. When we look at the demographics that are playing out and the change to our population across Victoria we see an ageing workforce. We see an ageing workforce which is increasingly flexible in the way in which it works, and we see an ageing workforce which is also looking to make sure that a transition to retirement is addressed and accommodated in a sensitive, flexible and compassionate way.

The statistics are, in fact, quite alarming when you look at the way in which workers leave work and then, for men in particular, often face an inordinately higher risk of mortality within two years of retiring. But we know that a staggered retirement, and a scaled-down number of working hours as that transition occurs, goes a significant way to addressing those risks. We know that where that flexibility is afforded to workers, and where there are no financial hindrances or penalties applied that might otherwise but for this amendment have applied, and but for this bill might have applied, that we are putting workers in the best possible position, along with their families, to be able to make the most of retirement. And that is one of the fundamental pillars of the superannuation system as a whole.

We want to make sure that those pensions in transition to retirement are preserved and that they are not yokes around the necks of workers who are transitioning to retirement, as well as recognising that members on unpaid sick leave can choose their level of notional contribution. Making sure that catch-up contribution provisions are improved is another important part, again, of not manifesting an indirect discrimination or an inequity for workers in this sector, particularly when we look at the way in which workers in emergency services and those professions are inordinately exposed to workplace hazards, to workplace stress, to post-traumatic stress and to ongoing challenges which can reduce or diminish their capacity to work full-time. Making sure also that we have death benefits for police recruits, and that distinction being removed to increase the death benefit paid in respect of police recruits without dependents, is another important clarification.

These are the sorts of careful, fine-tooth comb amendments that give effect to the many discussions and negotiations that were undertaken, including by the member for Melton in the other place when he was the head of the ambulance union, with more than 4000 members who worked alongside the Police Association Victoria and the United Firefighters Union to negotiate those contributions and that system with the Victorian government back in 1988. We know that this continues the commitment to make sure that there is a system of fairness, of transparency and of equity within the superannuation system at a state level, and we know that in fact it does preserve the intent and the purpose of the defined benefit scheme as it was set up.

In closing, I commend this bill to the house. I congratulate all who have been involved in getting right to the heart of the detail and the changes that needed to be made. One of the things that I think will give members of those funds within the defined benefit—and in fact other sectors—great comfort as emergency services workers is knowing that the dates are fixed and the system will be consistent, will be predictable and, from here on in, will be as durable as it can possibly be. This is against the backdrop of increasing change at a federal level and the challenge or threat of a ‘review’ of a system which to date has resulted in trillions of dollars in retirement income being carefully grown and nurtured by funds around the country to make sure that Australians can enjoy a significant, high and quality standard of life once they end their paid work and move into enjoying other stages, phases and activities within their lives. I commend this bill to the house, and I wish it a speedy passage.

 Mr MEDDICK (Western Victoria) (17:11): I am proud to speak briefly on this bill as I am always pleased to support our emergency services workers. Those who take care of us and protect us when we need them most certainly deserve to be protected at retirement by a fair superannuation scheme. Of particular importance is the way this bill will allow emergency services workers to transition to retirement and avoid burnout. This is extremely important as we know that emergency services personnel are almost four times more likely to suffer the effects of post-traumatic stress disorder as a consequence of the trauma they see throughout their careers.

When our paramedics, police officers, firefighters and other employees covered by the defined benefit superannuation scheme reach their preservation age, they have contributed 30 years of active service to our emergency services organisations and our communities. This bill also amends the current arrangement where employer superannuation contributions cease after the 30 years, instead phasing in continuing superannuation contributions for those incredible emergency services workers who work more than those 30 years. There are some paramedics who have even clocked up 45 years, and we should rightly continue paying superannuation contributions to them while they are working. We know that the nature of the work of our emergency services personnel is harder than ever, and it is forever changing. That is why I am glad to see a mechanism for members to catch up on their superannuation contributions if they fall behind to ensure they receive the full benefit they deserve.

A member of the Animal Justice Party and a career paramedic, Ward Young, spoke to me personally about this bill and the impact it will have on his life. I would like to tell you what he said, because nobody can express it better than our emergency services workers:

Being a paramedic can be a bit of an emotional roller coaster—the highs are highs, and the lows are desperately low. But it reassures me to see a government that supports its paramedics, and gives me the comfort that I need in knowing that when I get to the end of my career, there is the mechanism for an orderly transition to retirement. This will allow me to retire with dignity and without adversely affecting my superannuation, rather than working in a high-pressure role in the final two years of my career which is hard to maintain after 30 or 40 years in the job.

I thank Ward and all emergency services workers for the extraordinary service to the community that they continue to provide, and I am proud to have on the public record my support for their financial security when they enjoy a well-deserved retirement. It is the very least that we can do for them, and I commend the bill to the house.

 Mr JENNINGS (South Eastern Metropolitan—Leader of the Government, Special Minister of State, Minister for Priority Precincts, Minister for Aboriginal Affairs) (17:15): I am very happy to follow Mr Meddick, who gave a very powerful speech just now, and to indicate why the government is so supportive of providing for superannuation entitlements for emergency services workers for the reasons that Mr Meddick has just outlined. Other members of the chamber and other members of the Parliament and certainly the government are thankful for and do appreciate the mighty efforts that are undertaken on behalf of the Victorian people each and every day by those who work in our emergency services and the challenge they confront in very stressful environments to respond to emergencies, to keep calm, to acquit their professional responsibility to keep us safe and protected and to enable our citizens to enjoy a quality of life you would hope a modern society such as Victoria could provide for.

A modern state such as Victoria should be able to account for the retirement incomes and the security of those who work in emergency services and to provide for a quality of life in retirement after a very stressful working life. Indeed that is the fundamental basis of the reforms that are associated with this piece of legislation before the chamber today, and the government made commitments to the organised workforce who represent emergency services workers in a number of different agencies to provide for just those outcomes.

This piece of legislation does a number of very important things. Other members who have contributed to this debate have already identified not only the value of these reforms but the significant difference that they make to the quality of the working life of emergency services workers, particularly in the later years of their working life. These amendments simply, in summary, are to ensure that for those emergency services workers who are covered by a defined benefit scheme within the Emergency Services Superannuation Act 1986—once they have reached the maximum of their entitlement under the defined benefit component of the scheme—if they have reached a stage of their working life where that contribution or their entitlement has been maxed out, there is an opportunity for them to continue to accumulate additional support for their retirement. That will in the first instance apply from this current financial year at a 3 per cent contribution and over the course of the next seven years increase to 12 per cent accumulation and beyond their defined benefit cap.

Also, as Mr Meddick has actually said, the bill does provide the opportunity for people to maintain the effective salary level for their benefit to be determined even if they work part-time or modify their working arrangements in the last number of years of their working life to enable their benefit to be maintained even though they may reduce their working hours or the stress associated with their workplace, and they will not be disadvantaged under those circumstances. The bill also does provide for continuity of effective service to those who have had a number of approved leave circumstances during the course of their working life and for an opportunity to catch up on some contributions that may have been missed as a consequence of that leave. Indeed it does provide for other benefits, particularly for police recruits who do not have dependants, the method for calculating their death benefits will be modified by this piece of legislation. Overall, the primary purpose of this bill is to enable a smooth transition to retirement pensions for emergency services workers.

Other contributors to this debate in the chamber today have identified that the government is bringing forward some amendments to the Parliamentary Salaries and Superannuation Act 1968, which is also administered by the Emergency Services Superannuation Board on behalf of the Parliament and the people of Victoria, that will give effect to the consequences of the Victorian Independent Remuneration Tribunal’s determination on superannuation entitlements for members of Parliament. I would like to circulate some amendments that I will be moving in the committee stage of this bill at this moment.

Government amendments circulated by Mr JENNINGS pursuant to standing orders.

Mr JENNINGS: As I indicated to the chamber, the amendments that I will be moving in the committee stage are to deal with some inconsistencies that occurred in terms of the determination of two categories of members of Parliament that may have been treated differently in terms of both their contributions and their benefits that may have accrued to them as a consequence of the remuneration tribunal. These amendments will ensure that there is no discrepancy between those classifications of MPs. Indeed it ensures that the effect of the remuneration tribunal’s determination of the basic salary portion of the new base rate that has been determined by the tribunal to apply to MPs in the future is that the base salary portion will be the dollar amount by which contributions will be determined in terms of how much MPs will pay into the scheme and will be the basis by which the benefits will be determined and applied once a member of Parliament retires and their benefits are paid into the future.

The amendments will take effect, in terms of working out the contribution level that will be applied, from 1 July 2019, and the benefits will accrue from the time of the determination, which was 16 September 2019. The government will move those amendments in the committee stage. We hope those amendments will be supported by the Parliament today. This will mean that a fair contribution will be made by MPs. Their entitlements will be based upon a true amount, consistent with the remuneration tribunal’s determination, and ultimately that will enhance the confidence in which the Emergency Services Superannuation Board will administer the fund. Ultimately with this piece of legislation, going back to the primary purpose of this bill, we want to make sure that the scheme is funded and managed appropriately.

We thank the Emergency Services Superannuation Board on behalf of the Victorian government and the Parliament for managing and acquitting their responsibilities in terms of managing the superannuation funds that come within their remit. We believe that the cost structures that are associated with these reforms have been accounted for within the budget. Certainly in the forward estimates and beyond the significant variations that apply to emergency service workers’ entitlements have already been accounted for within the state budget settings. We think it is an appropriate commitment of the government to put its money where its mouth is in relation to these reforms and to provide that support to emergency workers. I thank the Parliament for its support, and I hope that I will receive support for the amendments when we go into the committee stage.

Motion agreed to.

Read second time.

 Mr JENNINGS (South Eastern Metropolitan—Leader of the Government, Special Minister of State, Minister for Priority Precincts, Minister for Aboriginal Affairs) (17:26): I move:

That it be an instruction to the committee that they have power to consider amendments and a new clause to amend the Parliamentary Salaries, Allowances and Superannuation Act 1968 in relation to the Parliamentary Contributory Superannuation Fund.

Motion agreed to.

Committed.

Clause 1 (17:27)

Mr RICH-PHILLIPS: Just to speak briefly to the amendments the minister has circulated, the minister has outlined the purpose of these amendments—to basically preserve the footing of the defined benefit superannuation scheme within the existing Parliamentary Salaries, Allowances and Superannuation Act 1968. The coalition will support these amendments to preserve the existing provisions with respect to superannuation. I note these arise from, as the minister outlined, some of the changes that were made with the introduction of the independent remuneration tribunal. I note that as the architect of the previous remuneration structure, which tied members’ salaries to average weekly earnings, I was sceptical about the introduction of an independent remuneration tribunal and the complexity that that would potentially introduce. That complexity may well have been borne out by what we have seen in the last six weeks, but as I said, that decision has been taken. These amendments will ensure that existing entitlements are preserved and that there is not an increase, and the coalition will support these amendments.

Mr JENNINGS: I thank Mr Rich-Phillips for indicating the support of the opposition for this. As he indicates, the amendments that I am moving today into the Parliamentary Salaries, Allowances and Superannuation Act 1968 are to ensure that the policy intention that the government brought to the remuneration tribunal legislation in terms of the effect of any determination by the tribunal will be met, and in that context Mr Rich-Phillips is absolutely correct to say that the policy intent and the outcome are being preserved, as the government presented to the Parliament earlier this year.

Mr BOURMAN: A bit of a statement and then I might ask a couple of questions, if I may, on the amendments. It is kind of good. I understand the reasoning behind the amendments, and I have no problems with that, but the statement is that as crossbenchers we have to be across everything. We have to be our own whip. We have to be everything, but we get nothing extra—as backbenchers. I guess the thing is that the number of crossbenchers may come and go, up or down, but I think we are a feature of this place—at least hopefully for the foreseeable future—and perhaps something could be thought about on that, because there is a vast list of things people can get extra money for, and none of them is being a crossbencher.

Anyway, I do not expect the government to respond to that, but if I can ask a question about the third party, what exactly in the context of all the superannuation and the remuneration is the third party?

Mr JENNINGS: First of all can I just respond as a general proposition to Mr Bourman’s first point that he made. The government is confident that in this and successive determinations the remuneration tribunal will be mindful of the role of all members of Parliament in acquitting their responsibilities, and I am certain that they will exercise their judgement over time about the range of matters that Mr Bourman has mentioned in terms of what the appropriate base rate is and the other allowances that may apply on the basis of acquitting the responsibilities of an MP, regardless of whether they are part of a parliamentary party, whether they are an Independent or whether they represent small parties. I am confident that the remuneration tribunal will work very hard over time to address that in a principled way that may remove some of the concerns that are implied in Mr Bourman’s statement.

Having said that, in relation to the third party, ‘third party’ is determined in the relevant acts of the Victorian Parliament to mean a party that has 11 members. If you had 10 colleagues, Mr Bourman, in this Parliament at the moment, you would be a third party because the party status is determined on a formula that relates to the size of representation within the party. It has in the past been a number that the National Party has been able to achieve in its own right in the Parliament. They are currently sitting under that level of representation in this Parliament, and so there would be no designated person in this Parliament that would satisfy that element of the schedule.

I move:

1.   Clause 1, line 9, after “Acts” insert “and to amend the Parliamentary Salaries, Allowances and Superannuation Act 1968 in relation to the Parliamentary Contributory Superannuation Fund”.

Amendment agreed to; amended clause agreed to.

Clause 2 (17:35)

Mr JENNINGS: I move:

2.   Clause 2, line 2, after “Act” insert “(except sections 4(5) and 16)”.

3.   Clause 2, line 2, after this line insert—

“(2) Section 4(5) is deemed to have come into operation on 1 July 2019.

(3) Section 16 is deemed to have come into operation on 16 September 2019.

In terms of the logic of these clauses, so that the committee understands it, amendment 3 indicates that there is a change to clause 2 so that section 4(5) is deemed to have come into operation on 1 July 2019—that relates to contributions—and section 16 is deemed to have come into operation on 16 September 2019. That applies to benefits. Amendment 2 just acknowledges that they will be affected by amendment 3. Ultimately amendments 2 and 3 are just to make sure that the operative date applies to both the contributions and the benefits that are going to apply under the scheme.

Amendments agreed to; amended clause agreed to.

Clause 3 (17:36)

Mr JENNINGS: I move:

4.   Clause 3, line 7, before “then” insert “on or after 1 July 2019”.

Amendment 4 allows the salary maintenance provisions to apply from 1 July 2019 and will ensure consistent application of this provision, and section 4(5) by virtue of clause 2 above is deemed to have commenced on 1 July 2019.

Amendment agreed to; amended clause agreed to; clauses 4 to 15 agreed to.

New clause (17:37)

Mr JENNINGS: I move:

5.   Insert the following New Clause to follow after clause 15—

‘16 Amendment of the Parliamentary Salaries, Allowances and Superannuation Act 1968

In the Parliamentary Salaries, Allowances and Superannuation Act 1968—

(a)   in section 10(1) insert the following definition—

“additional salary means the amount of additional salary calculated in accordance with the Table in subsection (6);”:

(b)   after section 10(5) insert—

“(6)   For the purposes of the definition of additional salary, additional salary means the highest additional salary amount specified in the Table in respect of the offices held by the Member.

TABLE

”;

(c)   in section 14(1) for “the gross amount of the instalment” substitute “an instalment of the aggregate of basic salary and additional salary”;

(d)   in section 14(2) for “occupies an office specified in section 6(2)” substitute “is an office holder specified in the Table in section 10(6)”;

(e)   in section 14(2) omit “payable to that member by virtue of occupying an office specified in section 6(2)”;

(f)   for section 21A(4)(a) substitute—

“(a)   the following definitions apply—

office means an office specified in the Table in section 10(6);

office holder means the holder of an office specified in the Table in section 10(6);

parliamentary allowance, in relation to a Member, means basic salary;

salary, in relation to a Member who is an office holder, means additional salary;”.’.

I will just run through what the effect of the new clause will be, and it will then become clause 16 of the bill. The first element of it is that it provides for a definition of the ‘additional salary’ that applies specifically for the purposes of the Parliamentary Contributory Superannuation Fund in part 3 of the act. The second thing that it will do is it will set out the meaning of ‘additional salary’ by specifying the percentage of the basic salary that shall apply. In this context, ‘basic salary’ means the basic salary portion as determined by the Victorian Independent Remuneration Tribunal, and the percentages of additional salary will be calculated in relation to that basic salary portion amount.

The next effect of the new clause will be to clarify that contributions to the Parliamentary Contributory Superannuation Fund will be calculated using the same basic salary, meaning the basic salary portion, and the new definition of additional salary that was inserted by subclause (a), which is the first item that I referred to in explaining the clause.

The next element that this will give effect to is it defines the office-holder and their parliamentary allowances and salaries that apply to each of those office-holders. That was the area where Mr Bourman picked out one of those office-holders to ask me a question about. There is a table that is inserted within this clause that apportions both the proportion of basic salary that will apply in terms of the benefits and the contributions that would accrue to MPs based upon that salary proportion that is in the table. That is included in this new clause, and this will align how contributions and benefits are calculated. It will also align the operation of the existing benefits scheme, which is for pre-1996 members, with the new benefits scheme members, which were from 1996 to 2004, so that all members are treated consistently. It also preserves for those members of the new benefits scheme the way in which benefits will be calculated under that scheme.

New clause agreed to; clause 16 agreed to.

Reported to house with amendment.

 Mr JENNINGS (South Eastern Metropolitan—Leader of the Government, Special Minister of State, Minister for Priority Precincts, Minister for Aboriginal Affairs) (17:42): I move:

That the report be now adopted.

Motion agreed to.

Report adopted.

 Mr JENNINGS (South Eastern Metropolitan—Leader of the Government, Special Minister of State, Minister for Priority Precincts, Minister for Aboriginal Affairs) (17:42): I move:

That the bill be now read a third time.

Motion agreed to.

Read third time.

The DEPUTY PRESIDENT: Pursuant to standing order 14.27, the bill will be returned to the Assembly with a message informing them that the Council have agreed to the bill with amendment.