The Hon W. Truss MP
Leader of the Nationals
Dear Mr Truss,
I am responding to your letter of 18 May 2012 and I apologise for the delay; I have been away until recently.
At the outset please let me assure you that I mean no disrespect in the comments that follow: I was raised on the land in Northern NSW, in Doug Anthonys old seat, and so support for the CP, CNP and the Nationals runs deep in my blood despite the passage time.
I am presuming your letter was generated by my forwarding, out of courtesy, the challenge issued by the three retired Service Chiefs, Gina Rinehart, Alexander Downer and 35 other signatories of 26 April 2012. I also acknowledge that you did not seek a response from me; I do so because I cannot ignore some of your comments.
I took no exception to the majority of your communication; however, your fourth paragraph causes me too much angst to simply ignore. (Paragraph Four says:
"As you are no doubt aware, all retirement schemes are different and there are many areas where retirement incomes and pension schemes are not equal other than in the way in which benefits are indexed. Many people receive retirement income from a number of sources and therefore share in the benefits and disadvantages of each scheme. For instance many service personnel receive a part age pension in addition to their DFRDB or other Military Superannuation and Benefits (MSBS) payments. The schemes also have different contribution rates. Active members of the services contribute about 5.5% of their after tax salary to their superannuation scheme. Some other schemes require a much higher contributions from their members. The standard employer contribution to superannuation today is 9%, although the Commonwealth contributes about 15.5% to the public sector superannuation scheme. The employer contribution to the DFRDB is about 33% and to MSBS is about 25%. The Defence Force schemes also offer earlier access and some Supplementary benefits not available to other retirees".)
If I did not know better, I would have assumed that the offending paragraph had been drafted by a Labor Party staffer – the manipulation of the data and the distortion of facts abound. Mr Truss, just like your Pre 2004 PCSS, which I am also intimately familiar with, ours is a Defined Benefit, legislated in the early seventies. The Jess Report responded to Liberal Coalition issued TOR and was tabled by that Government in 1972. The Whitlam Labor Government enacted ("accepted or improved on Jess") it 1973 and a Liberal Coalition Government legislated permanent indexation arrangements in 1976.
Please do not infer that the DFRDB scheme is generous or that one should be grateful – it was defined by the Parliament of Australia and it should be sustained by the Parliament of Australia. The Reinhart Challenge was simply stating the truth. Please, before you write to any other constituents in a similar vein simply compare your PCSS with DFRDB and CSS – your comparisons to modern superannuation arrangements can have no bearing on schemes defined forty or more years ago. You specifically noted that the DFRDB receives an employer contribution of about 33% and earlier access (after 20 years) than the society norm. In response I simply note the PCSS employer contribution rate of 67.6% and that it can be accessed after 8 years!
In 2001 Senators Sherry, Conroy, Hogg and others, through the Senate Select Committee on Superannuation and Financial Services, (Para 3.91) found that: "It was also a founding assumption (emphasis mine) that, as identified in the Pollard and Jess reports, annual indexation of benefits would preserve the purchasing power and value of benefits through adequately reflecting the rise in cost of living." Para 2.60 of the same report reinforced the intent. In 2002, the same committee (delete Senator Conroy and insert Senator Wong), Para 14.28, found: "The Committee recommends that the Government consider indexing Commonwealth funded superannuation benefits to Male Total Average Weekly Earnings (MTAWE) or the Consumer Price Index (CPI) whichever is higher, in order that recipients share in the increases in living standard enjoyed by the wider community."
Sir, please do not tell the serving and retired military community and / or their surviving dependants that they belong to a generous or fair superannuation scheme. I do freely acknowledge that up to 1986 DFRDB operated as Parliament and the legislation intended; however, from that point on it has progressively failed those most vulnerable. When their employer is also the legislator of entitlements and the arbitrator of complaints, and where no union is permitted, then that arrangement enshrines the potential for abuse of that power – since 1986 that is precisely what has happened and it is a national disgrace.
The 1986 two per cent reduction in CPI as applied to superannuation benefits for three successive years without restoration, followed by a 1989 redefining of CPI permitting quality offsetting and finally the new wage accord arrangements of the early nineties stripping CPI from its pivotal role in the wage arbitration process, guaranteed that the mid-seventies intent of Parliament to adequately protect veteran interests in retirement were deliberately abrogated.
Let me put the issue into stark reality for you:
– A retired Service Chief (three star officer) said to me recently: "We (he and his wife) exist in genteel poverty – a lifestyle demanding increased thrift." That distinguished officer retired in the eighties before the fiddles with CPI commenced.
– A Lieutenant Colonel, retiring in the same timeframe after 20 years service on 35% of the then salary now receives 19% of the current LTCOL salary.
In all of this spare a thought for the retired senior NCOs who also committed the vast majority, if not all, of their working life to the public service of this nation in the belief that the purchasing power of their superannuation was protected. Lamentably, we are now much wiser, realising the exploitation has been deliberate by successive governments of all political persuasions since 1986.
Having said all that, I took some solace from your first paragraph on Page 2;
"Nevertheless the Coalition believes that we should seek to improve superannuation benefits wherever we can. On the 27th July 2010 during the election campaign the Coalition committed to more beneficial indexation arrangements for DFRDB scheme members aged 55 years and older."
Regrettably though, whilst ever your pre-election policy continues to ignore the under 55 Invalidity and Reversionary pensioners, along with those on the newer (post 1991) MSBS who are also being severely impacted by the deliberately manipulated CPI process, then I am afraid the veteran voter remains highly sceptical of all promises made in Opposition.
Mr Truss we do not seek "fairer indexation to military superannuation pensions" – we seek restoration of fair indexation in accordance with the legislated intent.
Peter Criss AM AFC
Air Vice-Marshal (retd)
Defence Force Welfare Association (DFWA) member and authorised Alliance of Defence Service Organisation (ADSO) spokesman