Northern Territory Second Reading Speeches

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SUPERANNUATION AMENDMENT BILL 2004


Bill presented and read a first time.

Mr STIRLING (Treasurer): Madam Speaker, I move that the bill now be read a second time.

The purpose of this bill is to remove any doubt about the implementation of a decision made by the previous government to close the Northern Territory Government Public Authority Superannuation Scheme, known as NTGPASS, to employees who commenced their employment in the Northern Territory public sector on of after the 10 August 1999. As honourable members will recall, NTGPASS is the scheme for the provision of superannuation benefits to employees in the Northern Territory public sector. It was established in October 1986 under the Superannuation Act after the closure of the Commonwealth Superannuation Scheme to new Northern Territory government employees.

NTGPASS is a defined benefit scheme. This means that the government’s contribution to the benefit paid to an employees upon retirement is determined at that time using a formula based on the length of their employment and final average salary. However, not only is NTGPASS complex and costly to administer but, because it defers payments of the government’s superannuation contribution until retirement, it was giving rise to an increase in unfunded liability, the burden of which would fall upon future generations for Territorians. Accordingly, in this Assembly on the 14 October 1998, the then Treasurer announced that NTGPASS would be closed to new entries from the 30 June 1999, but that the rights and entitlements of existing contributors would fully protected. A new accumulation superannuation scheme would be established for employees commencing from 1 July 1999. The new scheme would be fully-funded and would meet Commonwealth superannuation guarantee requirements.

Closure of NTGPASS to new employees was delayed until the 10 August 1999 due to consultations between the government and the Trades and Labour Council. However, from that day onwards, new employees have been required to nominate an alternative superannuation fund to which the government employer contributions are made. Where employees do not nominate another fund, their employer contributions are made to a default fund which is, at present, the Australian Government Employees Superannuation Trust known as AGEST. Employees since the 10 August 1999 are, therefore, provided with alternative superannuation arrangements which meet the Territory’s obligation as employer and still gives employees the opportunity to make their own contributions and to elect from a variety of investment options in life and income protection insurance packages.

Because employees commencing since the 10 August 1999 have been required to join another fund, they are not eligible for membership of NTGPASS. A condition of eligibility under the Superannuation Act is that an employee cannot be a member of a superannuation scheme other than NTGPASS. However, the act itself is not amended to formally close this scheme to new entrants. On the 9 December 2003, the Commissioner of Superannuation sought to formalise closure of NTGPASS from the 10 August 1999 by using her powers under the Superannuation Act to declare employees commencing on or after that date to be a prescribed class of employees excluded from eligibility for membership of the scheme. Such powers authorise retrospective declarations. The commissioner’s declaration was published in the Gazette on 17 December 2003. Recently, Northern Territory public sector unions have voiced concern that NTGPASS has not been validly closed to new employees, and suggested that employees commencing since 10 August 1999, may be entitled to membership of the scheme.

The government has sought expert legal advice in response to these concerns, which confirms the validity of the Commissioner’s declaration and the closure of the scheme from 10 August 1999. However, to put the issue beyond any doubt, and to avoid any future uncertainty as to the status of public sector employees under the Superannuation Act, the government has decided that it is best to amend the act as it provided for in this bill. Clause 2 removes future permanent employees, as defined in the act, from the definition of ‘Eligible employee’ under section 3 of the act. Only an eligible employee is entitled to membership of NTGPASS under section 26. The Commissioner’s declaration of 9 December 2003 had the same effect on employees who commenced on or after 10 August 1999. That is, the declaration removed them from the definition of ‘eligible employee’ under the Superannuation Act.

As already mentioned, the government’s legal advice is that the Commissioner’s declaration was a valid exercise of her powers under the act. However, because of a decision of the New South Wales Court of Appeal some years ago relating to government employee superannuation legislation in that state, some doubt may exist as to the validity of the declaration. For the avoidance of any doubt, clause 3 of the bill declares the Commissioner’s declaration to have been validly made. That means that the bill confirms closure of NTGPASS to new employees from 10 August 1999, without affecting the entitlements of existing members prior to that date.

The bill also contains a ‘just terms’ clause commonly found in legislation of this kind to protect against constitutional invalidity. Honourable members will recall such clauses appearing in a wide variety of legislation passed by this House. Clause 4 provides for the determination of compensation payable to any employee from whom the Commissioner’s declaration, or the bill itself upon enactment, is found to have resulted in an acquisition of property. The purpose of the clause is to avoid the consequence of the bill, or the Commissioner’s declaration being held invalid if either is found to have resulted in the acquisition of property, otherwise than on just terms, contrary to section 50 of the Northern Territory (Self-Government) Act. Again, the government’s legal advice is that neither the Commissioner’s declaration, nor the bill when enacted, is likely to have resulted in any acquisition of property. However, in the remote event of this having occurred, the just terms clause is included to save the legislation, and ensure that NTGPASS remains closed to new members from 10 August 1999.

As I mentioned earlier, the introduction of this legislation was prompted by recent concerns raised by public sector unions that NTGPASS had not been validly closed. The government’s legal advice confirming the validity of the closure was sought in response to these concerns. However, as has been separately announced, after careful consideration of all of the circumstances surrounding the closure of NTGPASS in August 1999, the government has agreed to a proposal by the unions for a limited test case in the Supreme Court. The purpose of the case is to establish whether the closure of NTGPASS from 10 August 1999 resulted in an acquisition of property, such as to entitle employees to just terms compensation, as provided in the bill. It is important to note that if, contrary to our advice, the case is decided in the unions’ favour, because of this legislation employees may be entitled to compensation, but will not become eligible to join NTGPASS. This test case should fully resolve the unions’ concerns about the closure of NTGPASS and the precedent should alleviate the possibility of closure of the scheme being challenged again in the future.

I commend the bill to honourable members.

Debate adjourned.

 

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