By Pip Hinman
MELBOURNE — It seems that the Victorian government is determined to change the current public sector superannuation scheme by July, come hell or high water. While the rhetoric from finance minister Ian Smith has been conciliatory ("I am prepared to consider all options ... without prejudice"), the government has indicated that it is prepared to bring in the changes by regulation rather than face the expected parliamentary delays to new legislation.
The Kennett government is considering a number of ways to reduce its superannuation obligations. These include plans:
- to abolish or vary automatic adjustments of pensions with cost of living increases.
- to close existing schemes. Workers' accrued benefits would then be preserved and be transferred to schemes where benefits would accumulate according to the minimum required by Commonwealth standards (5% employer contribution, increasing to 9% by the year 2002).
- to restrict disability benefits.
Kennett is justifying his attack on super as a necessary response to the government's unfunded superannuation liabilities, currently estimated at close to $20 billion.
But according to David Bunn, federal secretary of the State Public Services Federation, the government's panic attack over unfunded liabilities is contrived: the government pays out this liability only in small increments as workers retire. Because of this, governments have opted to withhold their contributions until superannuation entitlements become payable.
"Victorian governments of all kinds have failed to fund their superannuation schemes since 1925" says Bunn. "The government professes to be surprised by that 50-year-old policy."
Until 1988 Victorian public sector workers enjoyed the highest superannuation entitlements available in any state (federal public sector workers had greater entitlements).
The 1992 Senate Select Committee on Superannuation, which compared the costs to government employers of superannuation schemes in the states and the Commonwealth, found that a new scheme introduced in Victoria in 1988 was less expensive than those in other states. This new scheme reduced average employer contributions from 21.5% to 11.3% of annual salary.
The SPSF fears that the Kennett government may try to further reduce employer contributions to 5%, the minimum required under federal superannuation legislation. For some public sector workers this could their total remuneration.
The Victorian branch of the SPSF has announced plans to campaign against government cuts and changes to the superannuation entitlements. SPSF general president Kay McVey said:
"If [the government] continues to make the enormous and brutal cuts they are making to the public sector without any consultation, they will outrage increasing numbers of people, and Victoria will become a state identified by the level of social unrest of its citizens. We are left with no option but to step up our industrial campaign, starting with a mass meeting of members in the Melbourne Town Hall on April 27."
Public sector workers will also march on Parliament House on May 5.