Legislative Assembly for the ACT: 1998 Week 9 Hansard (19 November) . . Page.. 2675 ..
MS CARNELL (continuing):
To put that $100m into some sort of context, that is the equivalent of doubling our rates. That is the equivalent of everyone in the ACT paying double their rates - again, something that people cannot afford. I do not think there would be one Canberran who would argue with that. Anyone with a home mortgage knows that the more money you pay off now the shorter the term of the loan and the lower the total amount over the life of the loan. Everybody knows that. The same principle applies to our unfunded superannuation liability. It was spelt out quite clearly in major reports done by the Government's superannuation advisers, Towers Perrin, earlier this year.
Those reports showed that by investing the money now we can save, and save heavily, in the long run. The effect of investing the lion's share of the ACTEW sale proceeds in superannuation is that we cut the cost virtually in half over 40 years, with only modest contributions from government. Instead of $3 billion, the cost is just $1.5 billion, and after 40 years approximately $800m of that remains in the investment account to cover the ongoing superannuation costs. In other words, after 40 years that ACTEW money is still there, generating returns and paying those superannuation costs.
How does this happen? Quite simply because investing that money now earns a steady flow of returns that cover most of the emerging costs of the unfunded PSS and CSS schemes into the future. It is a prudent plan that converts the value that taxpayers have invested in ACTEW into a superannuation investment that will reduce costs for decades to come. In the 1998-99 budget, the Government put forward an alternative plan that increases funding for superannuation over the forward estimates to $70m in year 4. Maintaining $70m per year for 25 years or so would also reduce the costs over 40 years, but finding that $70m per year is no easy task. Indeed, it would be a major financial constraint over the next 21/2 decades - a level of financial discipline that history tells us the Labor Party is simply not capable of.
Mr Quinlan has often used that $70m, saying, "If you can find it in year 4 of this budget, why can you not find it in the future?". The fact is that that money is available then because - wait for this - of the streetlights sale and the $100m that the ACT has already taken out of ACTEW. That is the reason it exists. If we had not taken that money from ACTEW, a move that those opposite opposed, we would not have the money to put into superannuation. You cannot have it both ways.
Mr Smyth: You can in the Labor Party.
MS CARNELL: It would appear so. The fact is that the only way you can maintain those levels of payments into our unfunded superannuation account is by raising taxes or cutting services. I have to say that that is not something that this side of the house believes is appropriate. Our tax rates are at the same sorts of levels as the States now and we cannot afford to have a high-taxing regime in the ACT, not as an island in the middle of New South Wales. This is a very real problem.
We have the Quinlan option, of course, of pulling $250m out of ACTEW now and investing it in superannuation. The problem here is that we currently have an unfunded liability of about $700m and it does not take a genius to work out that $250m does not cover $700m, even when you add the money that we have already got in the superannuation scheme, no matter how you look at it. That is ignoring completely the