STATUTES AMENDMENT (POLICE SUPERANNUATION) BILL

Second Reading

Adjourned debate on second reading.

(Continued from 5 March 2008. Page 2080.)

The Hon. R.I. LUCAS (17:55): I rise to support the bill on behalf of the Liberal Party. As outlined in the House of Assembly, the Liberal Party supports the general thrust of the bill and has not proposed any particular amendments to it. We understand that it has the strong support of the Police Association and neither the shadow minister nor any member of the Liberal Party has received any objection or opposition from any group, individual or constituent.

A central feature of the legislation, despite its name, we are advised only impacts on some 380 officers out of approximately 4,000. The police lump sum scheme covered by the legislation was open for only a very brief period between 1990 and 1993. Prior to that there was the police pensions scheme, which was closed, and the police lump sum scheme was open for a brief period, and subsequent to 1993 officers were party to the Triple S Scheme, which is available to all public servants. We have been generally advised that there are still around 2,000 officers in the police pensions scheme and just under 2,000 officers in the Public Service Triple S Scheme.

Other advice given to the opposition is that these 380 officers have been offered guarantees in relation to the legislation that they will get no less than they were entitled to under the lump sum scheme if they transfer. It is expected (and information provided demonstrates the case with some examples) that the benefits in most of the illustrated examples will be higher for police officers if they transfer to the Triple S Scheme out of the lump sum scheme.

We understand that this guarantee is being offered on the condition that the officers continue to pay some 5 to 6 per cent of their salary into superannuation. We are advised that if they do not, and if they drop back to 4 or 4.5 per cent, they do not have that guarantee and they accept the benefit of lower contributions in an ongoing way, but they will take the punt that the benefits of the Triple S Scheme will be higher than the lump sum scheme that they are leaving.

Our advice was that some of the younger officers might be prepared to take that option because it means they are paying less annually out of their salary into superannuation and are prepared, on the basis of the earnings profile of the Triple S Scheme, to take the punt that the benefits they will get over the longer term will be better in the Triple S Scheme than in the old lump sum scheme they are leaving.

Recent events in relation to superannuation investment earnings might concern some police officers as well as others, but certainly the advice government advisers provide to officers is that superannuation is a long-term investment, particularly for younger ones who have many years of ups and down in terms of the earnings profile of their superannuation ahead of them. If based on the past record of investment earnings of the Triple S Scheme, in the long term it will be a good and sensible investment providing healthy returns.

I have a number of questions that I will place on the record, and I seek the minister's response in his reply to the second reading. Can the minister provide the actual number of police officers in the Triple S scheme? Can he also provide the actual numbers—and we are talking about individuals, I guess—still in the police pension scheme? If there are full-time equivalent numbers, that is fine, but I am talking about the number of individuals.

Also, I have a question as to why the government has chosen to continue with the Police Superannuation Board. Specifically, can the minister put on the public record how much individual board members are paid? I understand that the chair and possibly one other member of the board receive an additional allowance or payment. What is the extent of that payment or benefit to members of the board?

I understand that the Police Superannuation Board will still make decisions in relation to invalidity determinations but, if we bear in mind all those officers transferring to the Triple S Scheme and those who are already in the Triple S Scheme, my understanding is that the Super SA board takes decisions in relation to invalidity in relation to all those officers, although it may well be that they take advice from the Police Superannuation Board. But the final decision, nevertheless, rests with the Super SA board. So, I guess the obvious question is: if significant numbers of police officers are moving to the Super SA fund, why has the government chosen to continue with the existence of the Police Superannuation Board; and is the government saying that it believes that particular board has a worthwhile role to perform, both now and in the long-term future?

I understand that one aspect of the legislation is that all police officers will now be provided with the option of retiring at age 50 years. I should say it is actually an additional benefit at age 50. I will read from the second reading explanation, as follows:

As the transferring members have an existing option to retire and be paid their accrued benefit after age 50, this option is being maintained in the Triple S scheme.

One can understand that. If they have an existing benefit and are transferring, they are going to be entitled to maintain that. But the second reading explanation goes further and says:

In fact, the bill also proposes that the age 50 retirement option will be made available to all police officers who are members of Triple S.

As I understand that, it seems to indicate that the almost 2,000 police officers who are already in the Triple S Scheme will now be given an additional benefit of being able to retire at the age of 50 years on similar conditions as these 380 officers. If I understand the second reading explanation correctly, I would like the government to confirm that, but can the government then indicate the cost of providing that extra benefit to almost 2,000 additional police officers? And I guess it then raises the issue of the equity within the Triple S Scheme for other members of that scheme who, as I understand it, do not have that particular option, and will not have it as well.

The other question I want to put is this. The government refers to a technical amendment in the legislation, and the second reading explanation says:

...an amendment is being made to the provisions in section 4(6b) of the Police Superannuation Act that deal with the determination of 'salary' for a member who has been seconded to serve with another police force or a prescribed body. The proposed amendment will address a deficiency in the current provisions that do not provide for the recognised salary with the external SAPOL body to have its real value maintained where the person is no longer working for that body at the time when an entitlement is to be paid.

This is intended to cover officers who are serving in the Australian Federal Police or overseas police forces, and others. But the phrase 'prescribed body' I understand also takes into account service within the Police Association and other such prescribed bodies—that is, an officer who serves for so many years in the police force, then serves a number of years in the Police Association and then goes back to the police force. I want to get some detail from the minister as to the impact of this particular proposal.

I will give the example of a police officer who, for 20 years between the ages of 20 and 40 years, for the sake of argument, earned a salary of $70,000. It would not have been consistent but, for the sake of argument, let us assume that it is. That police officer then, for 10 years between the ages of 40 and 50 years, goes to the Police Association and is on a salary of $140,000 for those 10 years. Then, at age 50, for whatever reason, he goes back into the police force for the next 10 years of his service between 50 and 60 years on a salary of $70,000. For that particular example I want the government's advisers to indicate the final benefit for that particular officer under the current legislation; and under the proposed legislation what would be the final benefit for that particular officer. I have just given that as an example so that we can perhaps try to understand exactly what is being proposed by what the government describes as a 'technical amendment' which will relate to a prescribed body. As I said, I have confirmed that the Police Association is a prescribed body in the government's proposed legislation.

I will indicate the final general question that I have. Mr Deane Prior was good enough to advise interested members in relation to the legislation. There has obviously been some concern about the earnings capacity of superannuation funds being invested on behalf of the public sector, and police officers also, in relation to the legislation.

The Treasurer has given some information in relation to the impact of the recent downturn in the investment climate on the investment performance of Funds SA. I am just seeking an assurance from the government's advisers that Funds SA has no direct exposure to the problems as they relate to the subprime crisis that has been discussed in recent months. My understanding, from the government's previous statements, is that I think the government has given that assurance in the other house.

I seek that assurance, and also whether or not any criticism or concern has been expressed about margin lending strategies, which have been discussed in the financial pages in most of the national papers in the past month or so, as they relate to the operation of Funds SA and Super SA and the funds that have been invested on behalf of South Australian public servants; in this case, South Australian police officers.

As I said, some concern is being expressed by public servants and also one or two police officers, and now is the opportunity for the minister—on the advice of the Treasurer, obviously—to hopefully allay the concerns that some might have in relation to the investment policies of the government and its officers on behalf of police officers and public servants.

Debate adjourned on motion of Hon. J. Gazzola.

At 18:09 the council adjourned until Wednesday 2 April 2008 at 14:15.