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Legislative Council - Fifty-Second Parliament, Second Session (52-2)
2013-09-25 Daily Xml
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ELECTRICITY INDUSTRY SUPERANNUATION SCHEME

Adjourned debate on motion of Hon. R.I. Lucas:

That this council—

1. Notes the concern of pension scheme members regarding the Electricity Industry Superannuation Scheme (EISS) and the set of documents providing the basis of that concern provided to members of parliament by the organisation SA Superannuants and Mr Richard Vear, a pensioner of EISS;

2. Refers the following matters and their associated administrative acts to the Ombudsman, pursuant to section 14 of the Ombudsman Act 1972, for investigation and report on the EISS method for calculating its taxed-source pensions and compliance of that method with the Electricity Corporations Act 1994 (as modified by the Electricity Corporations (Restructuring and Disposal) Act 1999)—

(a) probity of processes resulting in a letter dated 7 June 2002 addressed to the then under treasurer being received by the Department of Treasury and Finance and accepted as coming from the EISS board to advise that the board supported and recommended rule changes for EISS developed by the financial services firm Mercer;

(b) probity of processes resulting in receipt by the Department of Treasury and Finance of the Mercer explanatory memorandum dated 27 June 2002, which is a document that has been cited as providing evidence that the method for calculating EISS taxed-source pensions had no effect on employer costs;

(c) inconsistency between the claim made in the Mercer explanatory memorandum of 27 June 2002 that EISS rule changes would have no effect on employer costs and analyses contained in the Mercer reports of 1998 and 2004 showing that the rule now being used by EISS to calculate its taxed-source pensions would reduce employer costs if applied to pensions of the state pension scheme;

(d) probity of the decision to provide only the explanatory memorandum of 2002 and not the Mercer reports of 1998 and 2004 to the Crown Solicitor when advice was sought on compliance of the method with the Electricity Corporations Act 1994;

(e) probity of advice and recommendations of the Department of Treasury and Finance to the EISS board and the then treasurer, Kevin Foley, in connection with his authorisation of use of the method in June 2002 and to both Mr Foley and the Minister for Finance, Hon. Michael O'Brien MP, in connection with representations about the validity of the method that have been made by SA Superannuants and Mr Richard Vear;

(f) whether the method used to calculate EISS taxed-source pensions has reduced employer costs for those pensions compared to what the cost would be if the pensions had continued as untaxed-source pensions;

(g) whether the method complies with the Electricity Corporations Act 1994 including schedule 1, part F, clause 11: Treasurer may vary rules in relation to taxation, subclauses (1) and (2); and

(h) any other relevant matter.

3. Resolves that, in all the circumstances of the case, administrative acts associated with these matters warrant investigation by the Ombudsman despite the availability of any alternative appeal, reference, review or remedy of the passage of time since SA Superannuants and Mr Richard Vear had notice of the administrative acts

(Continued from 19 June 2013.)

The Hon. G.A. KANDELAARS (17:27): I rise to oppose this motion on behalf of the government. The council may recall that a motion representing the interests of South Australian Superannuants and EISS pensioners was moved by the Hon. Rob Lucas on 17 October 2012. That motion was regarding the calculation used to reduce the gross benefits of EISS members and, in many respects, they are the precursor to the motion we are discussing today. The house may recall that this calculation was implemented following the scheme's loss of constitutional protection at the time of the ETSA sale and its consequential move into a taxed superannuation environment.

The government is aware, from the debate held at that time, that SA Superannuants have a long-held view that the benefit reduction formula was incorrect and reduces the superannuation costs of the employer at the expense of superannuants therefore contravening the intent of the formula in the Electricity Corporations Act 1994, which was to go no further than to avoid an increase in employer costs.

In the Hon. Rob Lucas's previous motion, he outlined a set of terms of reference for investigation by the Ombudsman, and the government at the time supported that motion. On 23 November 2012, the Ombudsman contacted the Department of Treasury and Finance and noted that there were a number of technical difficulties associated with the terms of reference. They were said not to focus on administrative acts and did not comply with section 14(3) of the Ombudsman Act 1972. The Ombudsman recognised the clear intention of parliament that a review be carried out and sought to carry out an 'own initiative investigation'.

The investigation was to have the following parameters: whether the Department of Treasury and Finance and/or the Electricity Industry Superannuation Scheme Board provided misleading advice to the Treasurer in connection with the making, amendment and operation of rule 29(4) of the rules of the Electricity Industry Superannuation Scheme, made under clause 4 of the Electricity Industry Superannuation Scheme Trust Deed.

The Ombudsman later stated that he was advised by the SA Superannuants that they were seeking some adjustments to the terms of reference outlined in the previous motion. The Ombudsman subsequently advised the Department of Treasury and Finance that he would not proceed with the 'own initiative investigation'.

He instead wrote to the President of the Legislative Council, outlining jurisdictional difficulties of the earlier motion and decided to await further developments. This seems prudent in the face of the SA Superannuants' attempt to seek to change the terms of reference after the passing of a motion addressing their concerns in the parliament.

It therefore comes as no surprise that this new motion has been brought to this chamber by the Hon. Rob Lucas. The motion significantly differs from the terms of reference previously passed in this place. This current motion shifts the focus away from terms that could be construed as commenting on ministerial decisions and moves those terms of reference towards the Ombudsman's jurisdiction.

However, the Minister for Finance has received advice from the Crown Solicitor that there are still jurisdictional issues and technical problems with the current motion. In light of this advice, and the amount of difficulty there has been in establishing appropriate terms of reference since the previous motion addressing this issue was passed, it seems that passing this current motion will do very little to further the cause the Hon. Rob Lucas is seeking to represent.

The government therefore opposes the motion on the grounds that the Ombudsman—who, of course, is independent of government—should continue the inquiry he had proposed to instigate, following the parameters I outlined earlier. This opposition to the motion is made with the intention both to be expeditious and provide clarity to all interested parties when reviewing administrative acts of the Department of Treasury and Finance.

The Hon. R.I. LUCAS (17:33): I thank the Hon. Mr Kandelaars for his contribution to the motion. Mercifully for members, I do not intend to go over the long history of this motion. It has been before the chamber for many, many months. In our view, it is a relatively simple and straightforward matter. It has been supported by this council previously.

I would urge members who supported this particular motion previously to support this motion, in the interests of giving a fair hearing for these individuals who fought long and hard in their retirement to prosecute their case and to, in their view, get a fair hearing in relation to the issue. In our view, this is the appropriate way to go. The council, as I said, did pass a motion previously, but it was deemed that the wording in the particular motion needed to be changed, and that is the reason for the motion we have before us. I urge members to support the motion.

Motion carried.

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