I welcome the opportunity to speak tonight on this very important piece of legislation, the Defence Force Retirement Benefits Legislation Amendment (Fair Indexation) Bill 2014. All Australians owe an enormous debt of gratitude to the men and women who serve in our defence forces. Our Defence Force personnel sacrifice their time and risk their lives for the benefit of our democracy. It is only right that they are treated with the appropriate respect and gratitude when they have finished their service. Ensuring that their superannuation pensions are fairly and adequately indexed is one way the government can show this respect and gratitude.
I have long advocated for reform to the indexation of military and Commonwealth superannuation benefits. As members will be aware, Canberra is home not only to many of our nation's current and former Commonwealth public servants but also to many of our nation's current and former Defence Force personnel. This is therefore an issue that is of great concern to the people of my electorate. Since I was elected in 2010 I have been contacted by many constituents about the issue of fairer indexation of superannuation. It has probably been the No. 1 issue that I have been contacted about, apart from local issues. I have attended many forums. I have had many one-on-one meetings. I have had lots of coffees with individuals and groups. I have spent a lot of time discussing this issue with my constituents, getting their views on it. Like most Canberrans, they are very well educated and forthright in their views and they always put a very well-argued case, and there are usually lots of graphs involved. These discussions have been incredibly fruitful. As I said, the arguments have been delivered very forcefully and articulately and they have been well constructed. So I am well and truly aware of the views of my constituents on the issue of fairer indexation for military superannuation and Commonwealth superannuation.
Here I would just like to single out two individuals whom I have spent a lot of time drinking a lot of coffees with over the last three or so years. The first is Peter Thornton, who is not well, but, despite that, he manages to come down to Tuggeranong and sit with me and very methodically go through charts and graphs and the research that he has done over many years in putting his case for fairer military superannuation indexation. I would also like to single out Alf Jaugietis, who has also been terrific. There are a number of other constituents who I will not mention by name but who have been terrific. They know who they are, and I would just like to thank them for all the work they have been doing on this with me over the years, making me well and truly aware of the strength of their views and their commitment to seeing change.
I am proud of the progress made by the previous Labor government on this issue. A number of Labor colleagues have been working on this. My colleague Senator Kate Lundy, senator for the ACT, has been working on this tirelessly since she was elected. My predecessor as member for Canberra, Annette Ellis, also worked on it tirelessly, and there are a group of us in the Labor caucus who have been working on this for many years, with great passion, and we have this great group of constituents who have been informing us all along the way. We have advocated continuously on this issue.
As members will be aware, the Labor government engaged Trevor Matthews, a prominent actuary, to conduct an independent review of the indexation method used to adjust Commonwealth civilian and military superannuation pensions, and it has become known as the Matthews review. I know that my constituents have very varied and strong views about the Matthews review. And last year we announced significant reform to the indexation of the DFRB and the DFRDB schemes. On 30 July 2013, the member for Lingiari, then the Minister for Defence Science and Personnel, together with the former member for Eden-Monaro, then the Minister for Defence Materiel, announced that from 1 July 2014 payments to military superannuants within the DFRB and DFRDB schemes aged 65 and over would be indexed to the higher of the consumer price index or the Pensioner and Beneficiary Living Cost Index, whereas previously they had only been indexed by CPI.
This announcement represented the most significant change to the indexation of military superannuation for decades, with an estimated cost over four years of $34 million. I welcomed this significant reform, as did so many of my fellow Canberrans. However, I welcomed it as a great first step, acknowledging that there remained significant room for reform within Commonwealth superannuation pensions.
Today I acknowledge this legislation that has furthered Labor's groundbreaking reforms. This bill, which I am pleased to support, will allow for the triple indexation of the DFRB and DFRDB for superannuants aged 55 and over, and I welcome this change of heart from the coalition. As my colleague the member for Batman has pointed out, the Howard government repeatedly rejected reform of indexation of military super, despite the strong economic and fiscal position Australia was in at that time. So I welcome this development but acknowledge there is still a long way to go. But it is a great first step.
DFRB and DFRDB are just two Commonwealth superannuation schemes that were indexed only by CPI. Others include the MSBS, which my colleague the member for Batman just mentioned, as well as the Commonwealth Superannuation Scheme, the Public Sector Superannuation Scheme, the scheme under the Superannuation Act 1922 and the scheme under the Papua New Guinea (Staffing Assistance) (Superannuation) Regulations 1973. These other schemes, including military schemes, remain indexed by CPI only. Labor is concerned that in changing the method of indexation to some schemes and not others there is a potential for inequality to arise. We will closely monitor the implementation of this legislation to ensure that none of our veterans are worse off under these changes. I remain committed to continuing the campaign to improve the indexation methods applying to all military and all civilian Commonwealth pensions where it is economically sound to do so. I will continue to work closely with the representative organisations in my electorate, such as the DFWA, SCOA and the ACPSRO.
While I have made it clear that I welcome the changes to indexation enabled by this legislation, I would like to now put a caveat on that by saying that I do not welcome these changes if they are to be paid for by cuts in other areas of Defence. In fact, I do not think there would be a single Defence superannuant who would welcome these changes if they thought they were to be paid for by, say, cutting payments to the children of ADF personnel who have been killed or wounded in action. Yet, we have every reason to suspect that this is, indeed, the case, because the Abbott government is intent on cutting an annual payment of about $215 to 1,200 children of veterans. The Prime Minister says the government cannot afford the $250,000 it would cost to ensure that children of war veterans receive this modest assistance, despite the fact that the cost of this payment is less than providing his paid parental leave scheme to just four high-income earners.
Veterans' representatives have slammed the Prime Minister's cuts. The New South Wales President of the RSL, Don Rowe, said he was absolutely disgusted with the government's mean-spirited decision. Legacy Australia said that Legacy would be disappointed if any of the welfare payments were cut to the families of deceased or incapacitated veterans.
Nor would I support this legislation if it were to be paid for by cuts to the pay and conditions of currently serving ADF personnel. But, yet again, we have every reason to be suspicious because one of the first decisions taken by the Abbott government in the area of Defence was to cut the pay and conditions of Australian Defence Force personnel serving in Afghanistan and the Middle East. These cuts announced by the Abbott government in January this year have left some ADF personnel facing a pay cut of as much as $19,000. The government used the draw-down of troops in Afghanistan as an excuse to cut ADF pay. But the draw-down has not affected the conditions faced by the ADF personnel remaining in Afghanistan, Australia's maritime operations in the Middle East or the support provided through the Al Minhad base in Dubai. Australia's troops in Afghanistan and the Middle East are doing tough, essential work fighting the Taliban, supporting the wider war on terror, as well as antipiracy efforts. It is up to the Abbott government to fully explain why it has taken this decision and what has changed in these areas of operation to justify these cuts.
I am concerned, also, about the cuts the Abbott government has in store for the Department of Defence more broadly. I was particularly concerned when the Minister for Defence, Senator Johnston, commented on 7 October last year that the Department of Defence is 'too heavy' and needs to be 'trimmed'. These comments left Defence employees fearful of losing their jobs. Understandably, employees of the department wanted to know what these comments will mean for them. How does the minister plan on trimming the department? How much does he intend to trim the department by? How are jobs going to be cut? Are they only going to be cut through natural attrition, as promised prior to the election? Or can we expect to see redundancies? It is now five months since these comments were made and Defence employees are none the wiser.
Just last month, Minister Johnston was reported as saying that the Defence Materiel Organisation had 'shortcomings'. We have heard reports again and again that the Commission of Audit will recommend at least partial privatisation of the Department of Defence's procurement arm. But all that DMO staff have been told is that no decision has yet been made about their futures. This uncertainty is wreaking havoc on staff morale. The Canberra Times has reported that DMO managers are complaining about private companies sniffing around their staff in anticipation of these job losses. DMO is home to highly-skilled specialist staff who are dedicated public servants choosing to serve their country and their government, rather than taking much higher paying jobs in the private sector. My real concern is that when the job cuts come we will lose these highly-skilled staff from the Public Service for good. Minister Johnston has said he wants to see excellence and cost-effectiveness in DMO, but how does he think it will achieve excellence if we lose our best staff?
Both Defence and DMO employees thought that they might get a better idea of their job security when the first report of the Commission of Audit was released in January. But, unfortunately for them, the report was not released in January. Instead, the report, along with the fate of their jobs, has been sitting on the Treasurer's desk for months. The Abbott government is intentionally leaving our public servants in the dark; public servants know that cuts are coming; small businesses here in Canberra know that cuts are coming; the region knows that the cuts are coming—but they do not know when or how deep.
Before the election, the then Abbott opposition promised that there would be no cuts to Defence. They have already broken promise. I would like a guarantee from those opposite that the changes introduced by this legislation will not be paid for by more cuts to Defence or, indeed, by cuts to other pension or superannuation schemes.
As I said at the start of this speech, ensuring that superannuation pensions are fairly and adequately indexed is one way the government can show this respect and gratitude to our service people. There are other ways, too—like providing free basic medical services for Defence families, which Labor introduced through the National Australian Defence Force Family Health Program. Government also has a central role in ensuring the relevant Defence agencies—Defence, Veterans' Affairs, DHA and ComSuper—work seamlessly together to ensure that the transition from service for our retiring or discharged ADF personnel is a seamless one. This becomes especially important when those personnel are medically discharged through injury or illness.
Last year, as a member of the Defence Sub-Committee of the Joint Standing Committee on Foreign Affairs, Defence and Trade, I was a member of the inquiry into the care of ADF personnel wounded and injured on operations. The inquiry's report highlights a number of gaps of areas where we need to be doing more to support the health of our returned service people. These include mental health, and specifically female veterans' mental health, improving communications between Defence and DVA in the management of post-service transition and also providing seamlessness between the services. I would like to take this opportunity to urge the Abbott government to respond as a matter of urgency to the recommendations outlined in the report. It is impossible to exaggerate what we owe to our service personnel. In thanking them for their efforts and showing our gratitude for the work they do in securing our nation and preserving the democracy we enjoy here, we have to ensure that we provide the highest standard of care for them upon their return. Of course, this includes superannuation, but there is more we can do.
In my first speech in this place I quoted George Orwell with the saying that we sleep soundly in our beds because rough men stand ready in the night to visit violence on those who would do us harm. It is a tribute to those public servants called soldiers, but we also sleep soundly in our beds because invisible heroes ensure that our national interests are protected abroad. Others protect our borders or ensure that our children's toys are safe and our story is kept alive.
All public servants—military and civilian—deserve the respect and gratitude of this country. I congratulate the Abbott government on furthering Labor's reform of the indexation of military superannuation through this legislation. We welcome this further reform; after all, we are the party of superannuation. However, I remind the Abbott government that there are many more Commonwealth superannuants, including some in the military, who would also like fairer indexation of their schemes, so the job is not yet done. I strongly urge those opposite not to pay for this change with cuts in other areas of defence.