The Minister for Finance Lindsay Tanner did not cover himself with glory with inadequate response to Peter Thornton’s question to him on ABC’s Program Q&A on 15 February. Responding to concerns about the deterioration in military superannuant’s reducing standard of living dueto unfair indexation arrangements compared to age pensioners (and particularly pre 2004 Federal Parliamentarians) Mr Tanner again referred to the flawed Matthews Report as an “expert review”. Matthews said military superannuation was a “condition of employment” so Mr Tanner at least got that right – but neglected to say that the condition of military superannuation was that it would maintain living standards and purchasing power. The CPI index may have done that 30 years ago – but it has changed and doesn’t anymore. That’s exactly why the Government changed the index for aged pensioners so why not for military superannuants? 

Another issue Mr Tanner raised was that to change the indexation mechanism would be unfair on members who had earlier chosen to take a lump sum. What he ignored was DFRB and DFRDB members were never able to take their superannuation as a full lump sum. That right is a feature of the latest scheme started in the 1990s. In any case had they done so they would have enjoyed – by the Government’s own admission – returns well above inflation, so how would they be disadvantaged? Mr Tanner then suggested that a change would cost “billions and billions”.. the Association asks where is the evidence for this ? – we have asked in the past, but heard nothing. Mr Tanner’s emotive statement is meant to shock and simply does not add up – the reality is that the cost is affordable with Department of Finance revealing a full budget cost of $16m in 2010-2011 and the Future Fund well on the way to covering the full superannuation liability. 

The ability of the Government to suddenly find funds for free to air television stations ($250m), the Taliban ($25m) let alone the $40billion for “economic stimulus” surely ,makes a mockery of his assertions. We applaud Mr Tanner’s honesty in declaring he is a member of the older defined benefit scheme for MPs with its incredibly generous indexing method. We may have been more impressed if the Government had committed to changing the old MP scheme to the same CPI based mechanism that is used for military superannuants.