Northern Territory Second Reading Speeches

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ADMINISTRATORS PENSIONS AMENDMENT BILL 1999

These cognate bills seek to amend the Supreme Court (Judges Pensions) Act, the Administrators Pensions Act and the Legislative Assembly Members’ Superannuation Act. All pension based schemes to deal with an issue which arises as a consequence of the imposition of a Commonwealth surcharge tax. Further to these amendments, the Administrators Pensions Amendment Bill seeks to remove a number of anomalies from the Administrators Pension Act and to provide for an appropriate time and benefit for retiring Administrators.

Members will be aware of general details associated with the superannuation surcharge which is a tax levied on the employer contributions to high income employees.

Superannuation: In addition to other tax on superannuation benefits, the Australian Taxation Office assesses the surcharge debt for each member and requires the particular superannuation fund to pay the debt. Members would recall that amendments to all Territory government schemes in 1998 provided for the surcharge debts paid to the Taxation Office be recovered from the member when a benefit is paid on leaving the particular scheme. Unfortunately, the surcharge debts which arise during the course of employment may not be assessed and notified until the member has ceased employment and commenced receipt of a pension. The surcharge legislation requires that where a member leaves a scheme, any surcharge debt is sent to the member for payment, not to the scheme. Currently, the surcharge accounts being received relate to the 1996-97 financial year. One of the problems encountered is that where a member retires, it could be up to 2 years after a pension has commenced before the full extent of a surcharge debt is known to the former member. These surcharge debts could be substantial and not readily able to be met if the pension is the only source of income. The aim with the amendments is to allow part of the pension to be commuted under particular conversion factors for the sole purpose of the retired member paying a surcharge debt to the Australian Taxation Office.

I now refer to the proposed amendments to the Administrators Pensions Act. As it stands, the existing act does not, except in exceptional circumstances, provide a benefit when service is less than 5 years, although a minimum lump sum payment is payable under the Superannuation Guarantee Safety Net Act. In addition, the level of retirement benefits payable is not generally in keeping with the benefits payable in other jurisdictions. The requirement to serve 5 years as Administrator in order to receive a benefit is an unrealistic constraint for a worthy incumbent who, for whatever reason, wishes to serve a lesser period. Of the 8 Administrators to have retired since the early 1960s, only 3 served for 5 years or more.

Queensland, Tasmania and the Territory all impose a 5-year minimum period of service before a pension is paid, while South Australia has a 4½-year period of minimum service. Victoria also has a 5-year period but allows payment of a pro-rata pension for shorter periods. The Commonwealth applies no minimum period of service, while New South Wales and Western Australia do not legislate governor’s retirement benefits. The approach taken by Victoria is the simplest, most equitable model, which will remove this anomaly. The Administrators Pensions Amendment Bill provides for a pro-rata pension to be paid to retired Administrators who serve for periods of less than 5 years. The act currently provides for a pension to be paid equal to 50% of an Administrator’s salary, as varied from time to time; currently this equates to $64 950. This pension value is considerably lower than the average pension payable to the Governor-General and the Governors of Victoria, Tasmania, Queensland and South Australia of about $90 000.

This bill proposes to increase the pension payable to a retired Administrator from 50% of salary to 60%. This will increase the pension currently payable to $77 940, still short of the $90 000 payable in other jurisdictions but an improvement on the current situation. The bill also proposes to broaden the offset provisions in the act to include all retirement and separation benefits payable in respect of any previous renumerative activity. The existing offset provisions provide that the pension payable will be reduced by the actuarial value of any pension or lump sum retirement benefit payable in respect of previous public sector employment.

This is potentially inequitable by applying offsets or pension reductions to Administrators who are former public servants but not to Administrators who are former private sector employees. This bill will remove this anomaly. The bill also proposes that the government should be able to determine an alternative pension amount to provide a retirement benefit for an individual for their service to the Territory after taking into account the individual’s specific circumstances.

The bill further requires that an alternative amount determined must be tabled in the Legislative Assembly, this will ensure the transparency of any determination. This approach is similar to the situation in New South Wales and Western Australia where there is no legislation covering the retirement benefit of Governors. In those jurisdictions arrangements are determined individually for each Governor.

The amendments to the Administrators Pensions Act contained in this bill will ensure the act serves the intended purpose of providing an appropriate retirement benefit for retiring Administrators. I commend the bill to honourable members.

Debate adjourned.

 

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