Commonwealth of Australia Explanatory Memoranda

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PARLIAMENTARY SUPERANNUATION AMENDMENT BILL 2006

                               2004-2005-2006




THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA




                    HOUSE OF REPRESENTATIVES




PARLIAMENTARY SUPERANNUATION AMENDMENT BILL 2006




                    EXPLANATORY MEMORANDUM




(Circulated by the authority of the Special Minister of State, the Hon Gary Nairn MP)
                                             1




                                 GENERAL OUTLINE


       PARLIAMENTARY SUPERANNUATION AMENDMENT BILL 2006



OUTLINE
The Parliamentary Superannuation Amendment Bill 2006 (the Bill) proposes
amendments to the Parliamentary Superannuation Act 2004 (the 2004 Act) which
includes superannuation arrangements for Members of Parliament elected at the 2004
general election and subsequently.
The 2004 Act provides, in respect of Members covered by the Act, that a Government
contribution of 9 per cent of parliamentary salaries is payable to a complying
superannuation fund (other than a self managed fund) or retirement savings account
chosen by the Member or, where no choice is made, to the default fund declared by the
Minister for Finance and Administration. The amendments included in the Bill increase
the superannuation contributions payable under the 2004 Act from 9 per cent of
parliamentary salaries to 15.4 per cent of parliamentary salaries.
The increase in the contribution rate will apply to the contribution payable under the 2004
Act for the month in which the Bill receives Royal Assent.
The amendments proposed in the Bill will give effect to the Prime Minister's
announcement of 7 September 2006 that the Government would introduce legislation to
adjust the level of superannuation for Parliamentarians elected at the 2004 election and
subsequently so that it is the same as that paid to Commonwealth public servants, that is,
15.4 per cent.

Financial Implications

The estimated financial impact of the proposed changes to the contribution rate is set out
below:
                                  2006-07     2007-08     2008-09     2009-10     2010-11
                                    $m          $m          $m          $m          $m
 Fiscal Balance                     -0.2        -0.5        -0.7        -0.7        -0.9
 Underlying Cash                    -0.2        -0.5        -0.7        -0.7        -0.9

The fiscal balance detriment is due to the increase in expense of funding an additional
6.4% in Government superannuation contributions.

The negative underlying cash impact reflects the increase in the Government
contributions to the new accumulation arrangements.
                                             2



                                NOTES ON CLAUSES

Clause 1:      Short title

Clause 1 provides for the short title of the Act to be the Parliamentary Superannuation
Amendment Act 2006 (the Act).

Clause 2:      Commencement

2.  Clause 2 is the commencement provision for the Bill and provides that the Act
commences when it receives Royal Assent.

Clause 3:      Schedule(s)

3.    Clause 3 provides that each Act that is specified in a Schedule to the Act is
amended or repealed as set out in the applicable items in the Schedule concerned, and any
other item in a Schedule to the Act has effect according to its terms.


SCHEDULE 1 ­ AMENDMENTS

4.    Schedule 1 includes the amendments to the 2004 Act.

Parliamentary Superannuation Act 2004

Item 1 of Schedule 1

5.    This item amends subsection 8(2) of the 2004 Act which includes the rate of
contributions payable by the Commonwealth in respect of Members of Parliament
covered by the Act. The amendment substitutes the contribution rate of 15.4 per cent for
the contribution rate of 9 per cent.
6.    This amendment will give effect to the Prime Minister's announcement of
7 September 2006 that the Government would introduce legislation to adjust the level of
superannuation for Parliamentarians elected at or after the 2004 election so that it is the
same as that paid to Commonwealth public servants, that is, 15.4 per cent. That rate
applies to public servants who join the Public Sector Superannuation Accumulation Plan.

Item 2 of Schedule 1

7.     This item is an application clause which provides that the increased contribution
rate of 15.4 per cent applies to contributions payable under the 2004 Act in respect of the
month in which the Bill receives Royal Assent and each subsequent month. The effect of
this is that the increased contribution has retrospective effect. However, the amendment
has a beneficial effect and imposes a liability on no one other than the Commonwealth.