Legislative Assembly for the ACT: 1998 Week 3 Hansard (26 May) . . Page.. 572 ..
MS CARNELL (continuing):
The report on financing of the Public Service superannuation liabilities reinforces the need for increased funding, irrespective of any changes we make in relation to new staff. It is simply unacceptable that we take no action to reduce the burden on future taxpayers resulting from the superannuation benefits payable to staff who currently are employed in the provision of services to the community. Without appropriate action, the future annual benefit costs, estimated at up to $138m, will significantly impact on the capacity to maintain the standard of future service provision. In terms of establishing a funding policy, the report notes that it is possible to give separate consideration to two elements - first, the financing of future accruing liabilities; and, secondly, the financing of the past service unfunded superannuation liabilities. Fully funding superannuation liabilities for new employees addresses only part of the problem. The unfunded liability relating to existing employees is the major cost burden to be faced over the next three decades. The unfunded superannuation liability also constitutes the major single contribution to the ACT Government's annual operating loss.
The report presents the financial consequences of different options for the management of the accruing costs and the unfunded liabilities. The value of increasing the pace of funding is compared by calculating the present value of the required series of appropriations in each case. The report also gives consideration to the feasibility of taking advantage of the Government's AAA credit rating to meet all or part of the unfunded liability through borrowings. The funds would then be invested to meet the borrowing costs, with any surplus available to reduce the need for other funding. The results indicate that, by making contributions earlier, the Government can reduce the present value of the total ACT Government appropriations over time and reduce the emerging unfunded liability. The report emphasises that these considerations for increased funding should be made soon rather than in, say, 10 years' time when the emerging cost obligations have increased to levels where there will be little flexibility for variation. There is clearly no easy solution for these superannuation financing issues. We must look for a proper balance between paying now or paying later, within the constraints of the limited potential to divert current or future funds from the essential service delivery functions financed through the budget.
Mr Speaker, I table these reports, for the information of members of the Legislative Assembly and, of course, the staff of the ACT Public Service and the community. This is an absolutely essent4ial issue for this Assembly to come to grips with. It is an issue that, if we do not address now, will be a cost that future governments and the future community in the ACT simply will not be able to afford. It is a challenge; it is not an easy decision, but it is one that we must face.
MR QUINLAN (3.30): We recognise, along with the Chief Minister, that there are no easy solutions and that this liability is the No. 1 problem facing this Assembly as a whole in its deliberations on future financial arrangements for the Territory. Over the course of this Assembly, we do wish to participate to the maximum in addressing this problem, rather than see the hole dug bigger. We do note, I have to say, that previous ALP governments made a greater provision against this liability than has been made in recent years. Nevertheless, the problem is huge; there is no single silver bullet to solve it.