Legislative Assembly for the ACT: 1998 Week 3 Hansard (26 May) . . Page.. 571 ..
MS CARNELL (continuing):
I believe it is important for the ACT to consider its position in relation to the superannuation coverage of new employees. I would stress that the proposals under consideration will have no impact on entitlements or benefits of existing employees of the ACT Public Service, who will continue their membership of the CSS, the PSS or other schemes. The report confirms the need to contain the growth in accruing superannuation liabilities.
We also need to address the management of the unfunded liabilities which have built up since self-government in 1989. If we simply maintain the current arrangements, the report shows that we will face an annual emerging cost of $138m, in today's terms, by about the year 2023, or about 10 times the current annual cost of superannuation payments. The unfunded liability, which currently stands at just under $700m, is estimated to reach a peak of $1,700m in 15 years' time. These projections reflect the future impact of the entitlements for existing staff who are members of the CSS and the PSS. Clearly, the massive costs that this would impose on future taxpayers demand action now if we are to ensure that the superannuation of existing ACT Public Service employees is properly funded when they retire, without recourse to big cuts to government services.
It is clear from the consultants' report that most governments have already moved to provide new employees with superannuation benefits which are closer to the community standard applicable across the private sector. As a first step, we propose to follow the lead of the State governments and most private sector employers by developing arrangements for new staff which will be more affordable for future ACT taxpayers. These new arrangements will apply from the closure of the PSS, now anticipated to be 1 July 1999. From that date, all new starters will be given the opportunity to nominate the superannuation fund into which they want the Government's employer contribution to be paid. That choice will be unlimited and will give new employees the flexibility to continue in an existing fund or to select a fund which best meets their needs. This arrangement will be consistent with the Commonwealth's intention to make it compulsory for a choice of superannuation fund to be offered to new employees. We have a very diverse range of occupations within the ACT Public Service, and unlimited choice of funds recognises that diversity rather than mandating a single scheme.
The Government will move to establish a default scheme, to be selected following a tender process, to be used in the event that an employee does not nominate a fund. The employer liability in the fund chosen by the employee will be fully funded, to ensure that there is no increase in the ACT's unfunded liability relating to new staff. Having set out the Government's intentions for superannuation, it is important to recognise that superannuation should not be considered in isolation but needs to be considered as one component of employee remuneration. The detail of the new arrangements will necessarily be the subject of further negotiation. The report charts a course through new territory for the ACT Public Service and recommends a careful and well-considered approach which aims to provide maximum protection for our employees while providing them with a real choice. In considering the options available to us, I am conscious of the need to maintain a competitive position in the employment market while at the same time acknowledging the impact any new arrangements might have on the overall position of the Territory with regard to the unfunded superannuation liability that already exists, which is addressed in detail in the second report.