Wednesday, August 26, 2009

Brendan's (indexed) $122,391

Nice, eh?

Here's the Parliamentary Superannuation handbook.

As Brendan Nelson was in Parliament for 13 years he gets 62.5 per cent of a backbencher's salary, as adjusted from time to time. It's currently $127,060 per annum.

That's $79,412 per annum.

Plus per annum 6.25 per cent of the additional salary he received for occupying positions of greater responsibility for each year that he did so.

So that's -

an extra $1,985 per annum for the one year he served as a parliamentary secretary;

an extra $34,544 per annum for the six years he served as a Cabinet Minister; and

and extra $6,750 per annum for the one year he served as Opposition Leader.

Grand total: $122,391 per annum, indexed, for the rest of the rest of his life.

Oh, and he can take half of it as a lump sum if he wants.

(The younger you are, the bigger the lump sum. Brendan is 51.)

Can anyone improve on these calculations?

Or those I did earlier for Peter Costello?

Meanwhile, politicians are less kind to the other kind of public servant:

Friday August 22

A government decision to deny to its former employees benefits already extended to pensioners and to politicians has been condemned as "heartless" and a breach of promise.

Finance Minister Lindsay Tanner yesterday released the results of a review of the indexation formula used to adjust public service pensions and declared that it wouldn't be changed to bring it into line with the more generous formula used to boost the incomes of aged pensioners and retired politicians.

Aged and disability pensions are adjusted twice each year in accordance with community wage movements, and parliamentary pensions are adjusted in line with movements in parliamentary salaries.

But Australia's 300,000 retired public servants and members of the military are stuck with the much less generous formula based on the Consumer Price Index that aged pensioners escaped from a decade ago.

Because wages typically climb at around 4 per cent per year and the CPI at 2.5 per cent, in the decade since the the change aged pensions have climbed 51 per cent and public service pensions only 29 per cent.

Both the present Prime Minister Kevin Rudd and his deputy Julia Gillard expressed concern about the disparity in Opposition and promised an independent review should they win office.

The review by superannuation expert Trevor Matthews has found that there is
no case for a change.

"I realise this conclusion will disappoint many of those who made submissions to me and who presented their case for change to me in person. However, I have looked at the issues objectively and I cannot find that there is a case for an employer to be required to update a former employee’s retirement income in line with changes in community living standards," the report says.

Mr Matthews found that the Commonwealth's only obligation was to maintain the real value of its employees pensions and that "any enhancement of such indexation arrangements would constitute reward for no additional service". It would add $28 billion to the Commmonwealth's unfunded superannuation liabilities, swelling to $57 billion by 2020.

Superannuated Commonwealth Officers’ Association campaign manager John Coleman said the decision betrayed his members and went against the recommendations of two Senate inquires.

"Rudd and Gillard created great expectations. In emails to us before the election they criticised the Coalition' for not accepting the Senate recommendations of those Senate committees."

"I don't see why they even needed to have another review," he said.


Peter Parker said...

I'll agree with Mr Matthews and the government on this one.

Their whining has been most tiresome over many years. I cannot think of a more persistent group of rent-seekers whose demands are as unjustifiable as these.

There are zero 'public interest', 'social equity' or 'value to taxpayer' benefits of increasing payments to an already highly privileged group.

And highly privileged they are!

Until Bill Kelty did a deal with the government, few Aussie workers had super except for corporate high-flyers and public servants.

The average private-sector worker retiring now would have been accumulating super for less than 20 years, whereas public servants would have had it for nearer their full working life. Think compounding for the significance of this.

Tax rules treat pre-1983 super more generously than later super, and again almost the only people who had super in 1983 were the privileged groups mentioned above. So it's disproportionately the already well off who benefit from this treatment.

For years public servants had defined benefit schemes. These were rather generous (=costly to the taxpayer) and continued until economically rational governments stopped the rort.

Getting super for years, a generous scheme and favourable pre-1983 treatment all add up to formidable benefits for those lucky enough to have the right employer.

Privileged ex-public servants, the private health fund leeches and the private school trusts and the regressive 'Seniors Card' enthusiasts have all had a dream run from the public purse under govenments who lost the ball during the 2000s boom.

The present government has been soft on some matters (eg ruling out capital gains tax on the family home, increasing the FHOG, and refusing a carbon tax) but it is at least holding the line on this one.

And if it can then that means far more socially just opportunities for any money it may countenance spending, including public housing and transport projects, age pension increases and tax cuts for the working poor.

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