CHAPTER 4

25th Report of the Senate Select Committee on Superannuation
THE PARLIAMENTARY CONTRIBUTORY SUPERANNUATION SCHEME & THE JUDGES' PENSION SCHEME
TABLE OF CONTENTS

CHAPTER 4

Consequential Reform

Dislocation benefit

4.1 A parliamentary career can be disruptive to a parliamentarian's working life, particularly when a parliamentarian has to leave office involuntarily. The Committee was told that in addition to providing for retirement, the PCSS also makes provision for 'retrenchment' (leaving office involuntarily, for example by loss of an election or party pre-selection).

4.2 The Committee's suggested reforms should reduce the current potential for inequitable benefits among members, and should also assist in containing costs. This section considers a consequential reform to the PCSS should the PCSS be changed so as to focus on retirement provision: the introduction of a dislocation benefit for parliamentarians.

4.3 The Committee was told that currently the PCSS is attempting to perform too many functions. Dr FitzGerald said that:

4.4 Dr FitzGerald went on to say that one of the PCSS' costliest features is:

4.5 Mr Ray Stevens also identified the PCSS' multiple objectives as a source of difficulty. In his view, one of the important original objectives of the PCSS was to make provision for early loss of office. [3] He said:

4.6 The issue of a dislocation benefit was raised in submissions. The Parliamentary Retiring Allowances Trust submitted that consideration should be given, separately to superannuation, to a benefit for 'short-serving members to re-establish themselves in non-parliamentary employment on defeat at an election (or in pre-selection)'. [5]

4.7 While appreciating that the risk of loss of office (which follows from electors' democratic right to choose representatives) is an inevitable aspect of parliamentary life, the Committee notes the use of redundancy payments in the wider community in respect of comparable situations. Mr Stevens told the Committee that:

4.8 Similarly, Dr FitzGerald advised that the 'standard approach for dealing with that [unexpected loss of employment] in the rest of the community is redundancy pay arrangements'. [7]

4.9 The Committee understands that current severance benefits for Australian Public Service (APS) officers covered by the APS General Employment Conditions Award (GECA), which covers officers below the SES levels, are:

4.10 SES officers employed permanently (rather than on a fixed-term basis, see below), may receive a severance benefit at the discretion of the Public Service Commissioner under section 76R of the Public Service Act 1922. It is apparently usual for regard to be had to GECA in determining such a benefit.

4.11 SES officers employed for a fixed term who are made redundant receive may also receive a severance benefit at the discretion of the Public Service Commissioner under section 76R of the Public Service Act 1922.

4.12 Both permanent and fixed-term SES officers who are made redundant also receive financial counselling and out-placement counselling. [8] The extent of counselling services provided to individual officers varies on a case-by-case basis, depending on the officer's circumstances, and the practices of different agencies. The Committee understands that financial counselling and out-placement counselling are widely accepted forms of assistance to senior public sector executives who are made redundant, and are also used in the private sector.

4.13 The two parliamentarians who gave oral evidence during the inquiry, Mr Robert McClelland and Mr Wilson Tuckey, supported the concept of a dislocation payment. On a personal note, Mr McClelland MP said that the availability of a payment should he lose office was crucial to his decision to stand for Parliament:

4.14 As noted at the start of Chapter 3, a portion of the payment to which Mr McClelland referred will be diminished as a result of the Government's decision to introduce new preservation rules, if he continues in office after 1 July 1999.

4.15 The Committee notes that the introduction of a dislocation benefit for parliamentarians is opposed by some people. Mr Peter Szalay, a member of the public, argued against such a benefit, as follows:

4.16 It was put to the Committee that there is currently a general degree of uncertainty in relation to employment, and that therefore parliamentarians did not merit any advantageous treatment relative to the general community in respect of this uncertainty. It was also argued that parliamentary office is, in fact, more secure than many or even most forms of employment.

4.17 Mr Jim Collins, a member of the public, submitted with respect to the justification of parliamentary superannuation levels on the basis of the uncertainty of parliamentary office, that:

4.18 Mr Don Brown, a member of the public having a background in superannuation and financial services, said that it was now normal in the general community for people to have several medium term jobs, or careers, over their worklife. [12] Mr Brown submitted that:

4.19 Mr Szalay submitted that parliamentary employment is more secure than the employment of most ordinary employees, as parliamentarians are not subject to 'arbitrary dismissal or retrenchment at any point in time' unlike ordinary employees. [14]

4.20 Mr Paul Raffaele, Roving Editor of the Reader's Digest, told the Committee that:

4.21 The Committee notes these opposing views and considers that a dislocation benefit, and financial counselling and out-placement counselling for former parliamentarians, should be matters for consideration for the Remuneration Tribunal. The Tribunal should take into account the disruption of involuntary termination to parliamentarians' working lives, and the fact that that such arrangements are common in the general community. A dislocation benefit would, as Mr McClelland MP expressed it, 'assist with the transition back into private life'. [16]

 

Future determination of parliamentary remuneration

4.22 The question of which body should have responsibility for determining parliamentary benefits, including the proposed involuntary termination benefit, is important at the current time, and would have even greater importance if a total remuneration package approach were to be adopted in the future.

4.23 The Remuneration Tribunal currently deals with the electorate allowance and other benefits for members and office holders of Parliament. The Remuneration Tribunal does not deal with parliamentary salary (which is adjusted pursuant to statute by reference to a public service pay level), nor with parliamentary superannuation (see Chapter 1). However, the Remuneration Tribunal does have expertise in these fields, as it has in 'the course of carrying out its duties on remuneration and allowances ... examined and commented on the impact on remuneration of present superannuation arrangements'. [17]

4.24 Senator Kernot told the Committee, speaking in relation to the proposed dislocation benefit, that:

4.25 The Committee is of the view that the Remuneration Tribunal may be the most suitable body to consider the form which a dislocation benefit should take, and to determine the amount of such a benefit if it is established .

4.26 Given the suggestions in evidence that there should be no access to benefits before age 55, the Committee believes that the Remuneration Tribunal should consider establishing a dislocation benefit, independent of the PCSS, for all parliamentarians who retire involuntarily.

4.27 People can spend a lot of money and time fighting elections. The Committee considers that there should be a benefit provided for those who enter parliament at an early age and are subsequently defeated. In particular, the Committee believes there should be some recognition for those affected by the volatilities of marginal seats, especially as these people may well be of that special quality which it is clearly in the public interest to attract into Parliament.

 

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Footnotes

[1] Evidence, Dr Vincent FitzGerald, p. 153.

[2] Evidence, Dr Vincent FitzGerald, pp. 153-154.

[3] Evidence, Mr Ray Stevens, pp. 159, 160. On the establishment of the PCSS see paragraph 1.3 above.

[4] Evidence, Mr Ray Stevens, p. 159.

[5] Submission No. 43, Parliamentary Retiring Allowances Trust, p. 4.

[6] Evidence, Mr Ray Stevens, p. 160.

[7] Evidence, Dr Vincent FitzGerald, p. 157.

[8] Out-placement counselling is a service, provided by professional consultants, whereby an employee who has been made redundant is assisted to find new employment.

[9] Submission No. 24, Mr McClelland MP, p. 1.

[10] Evidence, Mr Peter Szalay, p. 190.

[11] Submission No. 7, Mr J. Collins, p. 1.

[12] Submission No. 11, Mr D. Brown, p. 1.

[13] Submission No. 11, Mr D. Brown, p. 1.

[14] Submission No. 18, Mr Peter Szalay, p. 2.

[15] Evidence, Mr Paul Raffaele, p. 106..

[16] Evidence, Mr Robert McClelland MP, p. 139.

[17] For this quotation, and the foregoing information on the Remuneration Tribunal's functions, see Submission No. 45, Remuneration Tribunal, p. 1.

[18] Evidence, Senator Cheryl Kernot, p. 180.