BLOG - HUMAN RIGHTS OF MILITARY RETIREES BREACHED

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Bert Hoebee's Blog

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In a letter to Peter Thornton and me on 24 February 2016, the President of the Australian Human Rights Commission (AHRC), Professor Gillian Triggs, acknowledged that recent Government action raises for consideration a breach of International Covenants, in that certain human rights of ADF superannuants were compromised by Commonwealth legislation in July 2014.

Professor Triggs agreed with one of our main contentions, in stating: ‘It appears that this matter raises for consideration Article 26 of the International Covenant on Civil and Political Rights, which protects the right to equality and non-discrimination in law in any field regulated and protected by public authorities, including the provision of pension entitlements.’  Whilst she offered no further comment on this, we believe that other International Covenants should also to be taken into consideration. [See Note 1.]

The AHRC agreed with us that a breach of human rights was precipitated by the passage of the Defence Force Retirement Benefits Legislation Amendment (Fair Indexation) Act 2014, which, whilst rightful in itself, resulted in a differential, unfair and discriminatory outcome for members covered under the MSBS, as opposed to those covered under DFRDB. [See Note 2.]

The long-standing purpose of indexation is to maintain purchasing power. Members of both schemes effectively rendered the same military service, which is accepted to be of a ’unique nature’; and it is discriminatory to treat them differently to the extent that MSBS superannuants are exposed to some collateral damage from well-intentioned Government action that did not take them into account, even though the Government was given prior warning of such a likely outcome.

We believe that the AHRC’s response to our submission is highly significant and of great value to Veterans in their rightful quest for a “Fair Go” in this, and potentially also in other priority areas, not least the proper indexation of MSBS preserved benefits.  Large proportions of current serving ADF members, and a growing number of retired MSBS military superannuants, are being adversely affected by this matter [in all some 170,000 members under the MSBS, which is due to close to new entrants from 1 July 2016].

Bert Hoebee

4 June 2016

Notes:

1. Article 2(2), of the International Covenant on Economic, Social and Cultural Rights (ICESCR) concerning the right to equality and non-discrimination which includes the right to adequate food, clothing, housing and to the continuous improvement of living conditions and pension benefits to assist persons to meet an adequate standard of living; Article 7, the right to just and favourable conditions of work, which includes the right to equal remuneration that could extend to pension benefits; Article 9, the right to social security, which extends to social insurance, and it is likely pension benefits fall within the scope of the right to social security; and Article 11, the right to an adequate standard of living.

2. Pensions for DFRBD superannuants aged over 55 years are now indexed twice yearly by the greater of the Consumer Price Index (CPI) and the Pensioner and Beneficiary Living Cost Index (PBLCI) measured against a floor percentage of Male Total Average Weekly Earnings (MTAWE). MSBS pensions and preserved benefits remain indexed to the CPI only.

Where is Military Superannuation Indexation Step Two?

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Many a reader will be familiar with the 'Polly waffle' form letters that we continue to receive from both sides of politics when we ask about fair indexation for ALL military superannuants, not just those over 55 who are on DFRB or DFRDB pensions.

In essence they just do not 'get it', or if they do, they doggedly stick to a party line, which does little to honour their constant rhetoric about caring for the troops – currently over 11,000 on MSBS pensions - and their families.

The fact of the matter is that any amount of defined benefit that an MSBS member chooses to take as an indexed pension was always intended to be indexed to maintain its purchasing power, just like DFRDB. That is one of the terms under which ADF people enlisted and served.

An extract, taken from the Member's Guide for DFRDB clearly illustrates the point:

           "What happens when you retire?
            You will get a retirement pension if you complete 20 years' service. You will also qualify if you do 15 years' service and reach the                   retiring age for your rank. Your pension is indesed twice a year to the Consumer Price Index. That way it does not lose value.                   You may take part of your pension as a lump sum but there are limits that apply. " [Emphasis added.]
            Source: http://www.defence.gov.au/dpe/pac/MG_12_3.htm (accessed at 07:30 am, 1 August 2013)

This is a very clear statement, I would have thought!! To now renege on that condition of service for some, and for MSBS members, is despicable, to say the least.

The fact that a factor used for indexation purposes [i.e. CPI] no longer in itself ensures the maintenance of purchasing power, should not be used as an excuse not to alter the factor. After all, it was altered for some DFRDB pensioners on 1 July 2014.

You will agree that all diggers, sailors and airmen now serving under MSBS understood the implied condition of service, in which CPI was cited, as meaning just what applied to DFRDB and which was stated for MSBS in the Military Super Book:

        "4. Attractive lump sum to pension conversion rates for the employer benefit. Pensions are subject to full consumer price index (CPI)                  updating. 

         Upon retirement you can elect to receive your employer benefit as a lump sum, a full pension, or you may elect to take part lump sum          and part pension. If you choose the latter, you must take 50% or more as a pension and the remainder as a lump sum.

         Pensions are subject to full (PI updating every six months (ensuring that $1 in 2011 will be equivalent to $1 in 2028)."                        [Emphasis added.]
         Source: Military Super Book 2011 (page 4)

In other words, the value of MSBS super in payment would be maintained, just like it was promised to be under DFRDB for those who served under that scheme, some of who transferred from that to MSBS. They understood, and rendered honourable service in the knowledge that their defined benefit pensions would be protected through adequate indexation. Note that the cunning B....s have since removed that statement from the latest PDS for MSBS. I wonder if the 'troops' were told about that?

The often-cited and so-called 'generosity' of MSBS is misleading and is an irrelevant red herring. MSBS (including proper indexation) was designed to take into account the unique nature of military service in all of its enduring dimensions, stemming from earlier legislation. Such deliberate design was enshrined in legislation like that - by the Parliament itself. Changing it, in a manner that has retrospective effect, is plainly not just or equitable.

Notwithstanding some of its design flaws, the most important aspect of the MSBS in payment is that it was to be indexed to maintain its purchasing power relative to the rest of the community. As the Hansard clearly shows this was one of the Parliament's founding principles in the design of military superannuation. It is reflected in the enactment of DFRDB in 1977, and remained so for MSBS in 1991. The application of CPI was merely incidental and chosen as an appropriate factor at the time of enactment. It seems that the current Government has now acknowledged the deficiency of CPI by agreeing to change the overall mechanism for DFRDB, but it remains entrenched in discriminatory thinking to not do so for MSBS. 

The facts surrounding this issue have been extensively lobbied about by many associated with the Defence Force Welfare Association (DFWA) and the Alliance of Defence Service Organisations (ADSO), and others. Much detail can be found on DFWA or ADSO web sites.

I hope that all MPs and Senators, especially those on the cross benches, will include this issue in their portfolio of concerns about the manner in which ADF and ex-ADF people are treated. I urge them in turn to raise it within their respective party rooms and the Parliament as a whole. In this particular case, an ex-service officer (now an Assistant Minister of the Crown no less!) appears reticent to address such glaring inequity. I hope that what he says about the issue is merely for public consumption, and that, in reality, he is working exceptionally hard behind the scenes to have the matter addressed. We live in hope ... ...

Recently, Bill Shorten sent out a blurb, which included this:

          "Whoever is leader, Labor is ready to fight for low and middle income Australians, the people hurt most by this Government's unfair                Budget and broken promises.

           My team is focused on policies that will support living standards, support jobs and help families with the cost of living. We believe in a            strong and growing economy that delivers for all Australians and doesn't leave people behind."

As Leader of the Opposition, Mr Shorten has it within his power to legitimately challenge the Government to honour its obligations to ADF personnel, to our veterans and their families; and to work with others within the Parliament to make it happen. Let the 'Light on the Hill', and not the history of political procrastination, guide him.

Let us all continue to press our Parliamentary representatives to take up the baton and fight for the inalienable rights of all members and ex-members of the ADF and their families.

Bert Hoebee
13 February 2015

The Nation is already broke

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If, as we are being told constantly, the Nation is already broke, then why was contestable evidence to that effect not put before the recent DFRT hearing?

 If it really is the case that we are broke, why are we still employing the ADF, and even going to war, as well as engaging in other new expenditure activities.  

Surely that is tantamount to insolvent trading?

Was the DFRT given evidence it was able to evaluate of where the previously budgeted pay rise for the ADF has been applied, before making its determination?

Parliament gives Veterans a Fair Go - But only some of them

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PARLIAMENT GIVES VETERANS A FAIR GO – BUT ONLY SOME OF THEM
That does not "do the right thing by those who have served".

Bert Hoebee, Life Member, Defence Force Welfare Association, 21 April 2014.

In a recent Camaraderie I called on politicians to fix indexation immediately and unconditionally. I stated that Peter Thornton's work showed the way to use the Future Fund to do so, and I asserted that nothing stood in the way, except their will to have it done. ("Here's how to solve the superannuation indexation inequity – now!", Vol 45 No 1, pp 22-23.)

The subsequent passage of the Defence Force Retirement Benefits Legislation Amendment (Fair Indexation) Bill 2014 delivered on the Coalition Leader's promise to take a 'first step' forward. Well done, so far. We need to be clear, however, that fair indexation has not yet been restored for all military superannuants.

Predictably, the Government's Media Release (1) proclaimed grandiosely that:
"This Government has long recognised the unique nature of military service and the sacrifices military personnel and their families make on behalf of all Australians. The Government's resolve to introduce our fair indexation policy reflects our unwavering commitment to support veterans and their families."
"By introducing this legislation today, the Government is doing the right thing by those who have served."

The fact is that Parliament's action will only restore a superannuation pension that maintains its purchasing power for some 45,000 over 55 y.o. DFRDB/DFRB retirees, out of a total of 57,000. The under 55's and some 10,000 Military Superannuation Benefits Scheme (MSBS) pensioners are entirely neglected.
Restitution is not even mentioned. This deserves an outcry of righteous indignation. Yes, we know that fiscal conditions are hard. But we have shown at least one way forward using the Future Fund without affecting the Commonwealth Budget, and thus avoiding difficulty in the context of the current fiscal
environment.

The initiative clearly fails the very test of fairness that prompted it. After all, if it is right and just to restore a neglected condition of service to some of those affected, how can it possibly be equitable not to do so for all others in a similar boat?

For those under 55 who qualify for superannuation under existing legislation, and all those who serve or have served under the current scheme – the Military Superannuation Benefits Scheme (MSBS) – the purchasing power of their superannuation will continue to spiral ever downwards, until some indeterminate time in the future; as shown in the graph on page 22 of the recent Camaraderie. That does not accord with notions of a "fair go".

Our Parliamentary representatives must be reminded that members of the ADF on MSBS and the under-55 DFRDB people who have also served and continue to do so, have done nothing different to those now to be properly indexed, except to be born a little later, or choose to go to, or be obliged to go with the MSBS on
the same understanding about their super maintaining its purchasing power - whenever they got it, and however large or little it was. They need to recall that a pension that maintains its purchasing power is a condition of ADF service. It was founded in the Parliament's establishment of military superannuation
schemes in the early 1970s, and is also reflected in the design and inception of MSBS in the early 1990s. Its
callous casting aside in the early 1990s ought never to have been allowed to occur.

Surely it is unjust discrimination to neglect those under 55 and all MSBS members and retirees whose service is supposedly recognised by the Government? As at 30 June 2013 there would be some 3,000 over 55, out of a total of 9,937 MSBS retirees. Must they all continue to suffer while the Government proclaims
its "unwavering commitment to support veterans and their families"? How cynical is that!

The Parliament should now demand that the second step be taken to close the indexation gap between DFRDB and MSBS military members and superannuants, some of whom still serve with distinction side by side in the ADF. Equity calls for that to be done as soon as possible within the current term of the Parliament. 

Let's have a just outcome and a fair go for all concerned, not just for some.

(1) - Media Release, MINVA016, Thursday 20 March 2014

Is the Future Fund at Risk?

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19 December 2013

The Future Fund is for Meeting Unfunded Commonwealth Superannuation Liabilities – Not for 'Raiding'

Serving and retired military and public service Commonwealth employees would be horrified to read the assertions attributed to Peter Costello, Acting Chairman of the Future Fund, reported in The Australian today (Creator turned chairman declares fund can help us in 'difficult days', Andrew White, 19 December, pages 1 and 2, 15 and 22).

They will be outraged that Mr Costello attempted to redefine the object of the Fund by rejecting ' ... suggestions the fund was a superannuation fund for public servants, calling it "Australia's sovereign wealth fund".'

Contrary to what Mr Costello might say, the Future Fund is not simply the 'money of the people of Australia' – it is the money put aside to "... make provision for unfunded [Commonwealth] superannuation liabilities that will become payable during a period when an ageing population is likely to place significant pressure on the Commonwealth's finances." (Future Fund Act 2006, s. 3 (2)). A 'broader role' is not provided for in the legislation.

Statements like Mr Costello's [as a 'guardian' of the Fund] put seriously at risk the confidence that should exist between the Commonwealth and its employees, who must be assured that their employer will honour its obligations to them in retirement.

It now behoves the Government to urgently correct what Mr Costello said, and to assure its employees and retirees that their current and future superannuation income lodged in the Future Fund is secure.

The Government should also declare that it shall deposit employer contributions into the Future Fund, as regularly as all other employers are required to make "superannuation guarantee" contributions. Only in that way can those employed in the public sector be assured that the Fund will have sufficient assets to meet its future liabilities.

Bert Hoebee

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