Chapter 2 - Consideration of the Bill
Introduction and overview
2.1
The purpose of the Bill
is to amend the Federal Magistrates Act
1999 (the Act) to provide statutory disability cover and death benefits for
Federal Magistrates. The current arrangements provide no specific entitlements
covering retirement on disability grounds or in the event of death.
2.2
When the Federal Magistrates Court was established in
2000 it was the Government's intention to create a low cost court. In keeping
with this intention, Federal Magistrates were not covered by the Judges' Pensions Act 1968. Instead,
Federal Magistrates are currently entitled, by a determination by the
Governor-General under the Act, to a superannuation contribution by the
Commonwealth of an amount equal to 13.1 per cent of salary to a complying
superannuation fund or a retirement savings account.
2.3
The Explanatory Memorandum explained the rationale for
the Bill:
The lack of insurance against disability for Magistrates is
potentially problematic. Magistrates hold office until age 70 unless they
resign, die in office or are removed by the Parliament on the ground of proven
misbehaviour or incapacity before this age. In the absence of adequate
protection in the event of serious disability, a magistrate whose performance
is significantly impaired for medical reasons may nonetheless be unwilling to
resign.[1]
2.4
In the Second Reading Speech it was noted that:
The Bill provides federal
magistrates, their spouses and dependants with income protection and death
benefits that have until now been lacking. The Government acknowledges the
significant contribution federal magistrates make to an efficient federal civil
justice system, and is committed to ensuring that they are provided with fair
and adequate remuneration and conditions.[2]
Disability cover
2.5
The
Bill would amend the Act to provide that where the Attorney-General certifies
that the resignation of a magistrate is due to permanent disability or
infirmity, a pension of sixty per cent of salary would be payable to the
Magistrate until he or she attains the age of 65 or dies, whichever comes
first.
2.6
The
Commonwealth would also make contributions to the Magistrate's superannuation
while the disability pension was being paid. This would ensure that
Commonwealth provided superannuation support for an incapacitated Magistrate
would be the same as if the Magistrate had continued to work to age 65 or, if
the former Magistrate dies before this age, to the date of death.
Death benefits
2.7
The Bill would also provide death benefits for
Federal Magistrates. The Bill would amend the Act to provide that, where a
Magistrate dies in office or a former Magistrate in receipt of a disability
pension dies before reaching age 65, a lump sum, covering the period between
the date of death and age 65, is payable to the Magistrate's spouse and
dependent children.
2.8
The
lump sum would be equal to the superannuation contributions the Magistrate
would have received during the period between the Magistrate's death and the
Magistrate's 65th birthday, based on the salary payable to a
Magistrate at the time of the Magistrate's death or, where the former
magistrate was in receipt of a disability pension prior to death, the salary of
a serving Magistrate at the time of death.
Major Issues
2.9
Submissions
generally supported the intent of the Bill to provide statutory disability cover and
death benefits for Federal Magistrates as a considerable improvement on the
current situation. Submissions, however, generally took the view that all
judicial officers should be treated equally in respect to entitlements and that
the most appropriate way of achieving this would be to include Federal
Magistrates in the operation of the Judges'
Pensions Act.[3]
2.10
A
number of issues were raised in submissions concerning the Bill, including age limitations on entitlements,
amount of death benefits and same sex relationships. These issues are discussed
below.
Age limitations on entitlements
2.11
Submissions
argued that while Federal Magistrates hold office until the age of 70 years,
the proposed provisions relating to disability cover and death benefits are
expressed to operate in respect of Federal Magistrates and retired Federal
Magistrates who are 65 years or younger.
2.12
Specifically:
-
section
9A provides that the Minister may only certify a Federal Magistrate as a
retired disabled Federal Magistrate if the Federal Magistrate has not attained
the age of 65 years;
-
section
9B provides that a retired disabled Federal Magistrate is only entitled to a
pension until he or she attains the age of 65 years or dies, whichever occurs
first;
-
similarly,
section 9C provides that a retired disabled Federal Magistrate is only entitled
to a Commonwealth superannuation contribution until he or she attains the age
of 65 years or he or she dies, whichever occurs first; and
-
section
9D only provides death benefits where a Federal Magistrate or a retired
disabled Federal Magistrate who has not attained the age of 65 years dies.
2.13
The Federal
Magistrates Court of Australia stated that it is difficult to see the reasoning
for limiting these entitlements to Federal Magistrates and retired disabled
Federal Magistrates who are 65 years or younger. The Court argued that 'this
approach appears to be discriminatory against Federal Magistrates and retired
disabled Federal Magistrates between the ages of 65 and 70'. It was also argued
that the approach contradicts the Government's objective of encouraging
participation in employment by persons older than 65 years of age.[4] Mr Raphael, a Federal Magistrate, also argued that 'there is no logical
explanation for the decision to limit the benefit to the age of 65, [and] it is
ageist'.[5]
2.14
The Federal
Magistrates Court recommended that the age limitations in the Bill (sections
9A, 9B, 9C and 9D) should be amended from 65 years, as currently proposed, to
70 years so that they are aligned with the appointment of Federal Magistrates.
Amount of death benefits
2.15
Submissions
raised concerns in relation to the perceived inadequacies in the amount of
death benefits payable to eligible spouses and eligible children.[6]
2.16
Section
9D provides for the amount of death benefits payable to an eligible spouse or
eligible children to be equivalent to the amount of Commonwealth contributions the
Federal Magistrate would have been entitled to if the Federal Magistrate had
not died or retired due to disability during the period between the death of
the Federal Magistrate or retired disabled Federal Magistrate and the date they
would have attained the age of 65 years. Under current arrangements, the
Commonwealth makes a superannuation contribution payment to Federal Magistrates
of an amount equal to 13.1 per cent of salary. Federal Magistrates are not
permitted to be members of public sector superannuation schemes.
2.17
The Federal
Magistrates Court argued that the amount of death benefits proposed in the Bill is inadequate and benefits payable should
be equivalent to the pension and superannuation entitlements the Federal
Magistrate or retired disabled Federal Magistrate would have received up until
the age of 70 years.[7] Mr Raphael, commenting on the low level of these benefits, stated that there
should be a floor under the death benefits to ensure that the benefits payable
are never less than $400,000.[8]
Same sex relationships
2.18
Section
9E defines certain relationships for the purpose of establishing status as a
beneficiary for a death benefit payment. Submissions noted that these
definitions for 'eligible spouse' and 'marital relationship' do not make
provision for same sex relationships.[9] Mr Raphael noted that to 'impose such discrimination' on a court which has the
prime responsibility for dealing with cases under the Commonwealth
Anti-Discrimination legislation is 'ironic'.[10]
2.19
The Explanatory
Memorandum explained, however, that these definitions are generally consistent
with the definitions used in legislation establishing Commonwealth
superannuation and pension schemes, including those contained in the Judges' Pensions
Act.[11]
Committee view
2.20
The Committee welcomes the Bill
and acknowledges that it fills an important gap in proving statutory disability
cover and death benefits for Federal Magistrates. The Committee believes,
however, that there are some aspects of the Bill
that require amendment.
2.21
The Committee considers that the age limitations in the
Bill that apply to disability cover and death benefits should be increased from
65 years, as currently proposed, to 70 years so as to align the provision of
benefits to the terms of appointment of Federal Magistrates, which is 70 years.
The Committee sees no clear reason for why the Government choose the age of 65
years as the cut-off point for the cessation of these benefits.
2.22
The Committee notes that there is considerable
inconsistency in the ages at which judges generally are eligible for various
benefits and there is a need for more consistency in this area. The Committee
notes that Federal Magistrates are the only Chapter III judges not covered by
the Judges' Pensions Act – which generally provide more generous benefits than
that available to Federal Magistrates. The provision of disability pensions and
death benefits provides some measure of 'catch-up' in the provision of benefits
already available to other judges. The Committee considers that given the
Federal Magistrates Court's role, jurisdiction and increasing workloads, the
remuneration and entitlements of Federal Magistrates need to be consistent with
more senior judges.
2.23
In relation to the provision of death benefits, the
Committee believes that the Government should provide a more generous level of
benefits. The Committee believes that lump sum payments based on superannuation
contributions alone would generally provide relatively small amounts of death
benefits to eligible spouses and children. While the Committee has some concerns
that the Bill does not provide provision for same sex relationships in the
payment of death benefits, it notes that the definitions used in the Bill are consistent with legislation
establishing Commonwealth superannuation and pension schemes, including those
contained in the Judges' Pensions Act.
Recommendation 1
2.24
The Committee recommends that the age limits specified
in the Bill limiting eligibility for disability
cover and death benefits be amended from 65 years to 70 years.
Recommendation 2
2.25
The Committee recommends that the death benefits
payable to an eligible spouse or children under the Bill
be reviewed to provide more adequate compensation payments.
Recommendation 3
2.26
Subject to the amendments set out above, the Committee
recommends that the Bill be passed.
Senator Marise Payne
Committee Chair
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