Dennis Jensen (Tangney, Liberal Party) Share this | Hansard source

The Defence Force Retirement Benefits Legislation Amendment (Fair Indexation) Bill 2014 addresses a serious anomaly that Labor tried to hide and talk around for six years. That anomaly is the unfair, non-indexed retirement benefit situation constraining our aged veterans. Fair indexation is something that I have personally championed for many years, including in the party room during my first term in the Howard government.

Labor broke its 2007 election promise to fix the issue of military superannuation indexation. Labor lost its way on reform of military superannuation. In 2007 Labor promised to release the findings of the previous coalition government's review into military superannuation arrangements, otherwise known as the Podger review. Labor's release of the Podger review was seen by Labor as the end of their commitment to reform. Their consultation produced no outcomes. Labor's wasteful and reckless spending in so many other areas left them unable to meet their 2007 commitment to prevent the further erosion of veterans' pensions due to unfair indexation.

After spending so much money on pink batts, green loans and the failed BER school halls program, Labor was unable and unwilling to find the funds necessary to meet their commitment to veterans on military superannuation reform. It is very easy to talk of nominal increases, or gross increases, or even annual increases. Viewed in a vacuum all of the above are very helpful and welcome for veterans. However, life does not operate in a vacuum. Any increase must be viewed in the context of the rising cost of living pressures and the threat of relative deprivation. The key question is: is my quality of life at least as good as it was last year? The question then becomes: what is the real increase or net gain?

I will not indulge the members opposite by providing them with a basic education in economics. Suffice to say that when costs of inflation are taken away, and the relative increase in purchasing power is factored in, the unfair CPI fat lady is very much exposed. Labor lies can never hide the truth that the previous Labor government never prioritised the military or defence personnel in any way. If it was so, how could they have cut defence spending back to levels which, when measured as a percentage of GDP, were last seen in 1938?

The coalition listens to expert advice and acts. The original DFRDB scheme contained a wage based indexation element that was removed in the mid-1970s when the government decided to apply the CPI to a wide range of social security and superannuation pensions. In recent years, the government has changed indexation arrangements for social security pensions to include a wage based component. CPI indexation does not maintain relativity with community incomes. As the federal member of the seat of Tangney in Western Australia, this aspect is of particular concern to my constituents.

The effects of the mining industry in WA are far and away positive. However, one significant drawback is the effect of a two-speed economy on wage growth. The bill is good for WA, and especially good for veterans and defence personnel in my electorate of Tangney. Labor have been saying since 2011 that CPI is not a good measure, and that the current system is broken. Yet, typical of Labor, they saw a problem but were incapable of fixing it. Like the budget, not only did they fail to fix it but they actually made it worse. In 2010 the coalition promised fair indexation. Before the 2013 federal election this commitment was restated, and from 1 July 2014 57,000 DFRB and DFRDB superannuants aged 55 and over will have their benefits indexed in line with age and service pensions.

As promised the fair indexation provisions will also extend to reversionary pensioners aged 55 and over. The government has long recognised the unique nature of military service and the sacrifices military personnel and their families make on behalf of all Australians. In summary, it comes down to real versus nominal, trickery versus delivery, Liberal versus Labor.

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