Safety at Work

I spoke in parliament yesterday in favour of new legislation that restores workers' compensation coverage to public servants who are injured during recess breaks.
Safety, Rehabilitation and Compensation and Other Legislation Amendment Bill 2011
1 June 2011


In 2006, a Commonwealth public servant in Queensland told the story of having sprained an ankle just two metres from the front door of his building while going out for a lunch break. Would any of us reasonably think that that was not a workplace accident? Would any of us reasonably seek to deny someone who suffered such an injury fair compensation? The Safety, Rehabilitation and Compensation and Other Legislation Amendment Bill 2011 may look technical, but in its essence it is about fairness and it is about equity. If you have ever been injured at work, you know that it can be a time of incredible stress and uncertainty. This bill provides greater assurance to employees covered by the Safety, Rehabilitation and Compensation Act about their rights and entitlements. This bill also expands the application of the SRC Act to ensure that people deployed on dangerous missions, whether here or overseas, have greater certainty about their workers compensation coverage.

The recess breaks amendment reinstates a previously held entitlement to workers compensation insurance coverage for workers on unpaid recess breaks. Leaving work for a coffee, for lunch or for an appointment during your own time currently leaves public servants without workers compensation coverage. This means that public servants participating in a lunchtime stroll around Lake Burley Griffin are left without workers compensation coverage, even when the walk is part of a charity activity supported by their department. People who slip on the frosty Canberra grass on a winter's morning on their way to warm up with a coffee or a hot chocolate are denied coverage for any injury they sustain.

Under current arrangements, workers on a recess break may only claim some compensation through their motor vehicle insurance. So the workers who are punished by these Howard government reforms removing coverage for recess breaks are those workers who are being more socially and environmentally responsible. Restoring this coverage to workers covered by the Comcare scheme is important to me as the member for Fraser, not just because of the significant number of Australian Public Service employees living in my electorate but also because the Comcare scheme covers employees of the Australian Capital Territory government. Additionally, employees of non-Commonwealth licensees that self-insure under the Comcare scheme will see those rights restored to their working conditions. The rights restored by this bill apply to ACT government employees as well as Australian government employees. Unusually for public sector workers, ACT government employees are not able to lobby or negotiate with their direct employer over their workers compensation arrangements. In that respect, as their representative here in the big house in Canberra, I feel an additional duty to ensure that the rights of these workers are improved.

Workers compensation coverage is a basic right in Australia. Most voters would reasonably expect that if an employee is injured by their work or while carrying out their work then they should be compensated for their injury. I need to be clear here and stress again to the House that workers compensation coverage for employees on recess breaks is not a new entitlement. It restores a right previously held by Commonwealth and ACT government employees from the introduction of workers compensation insurance in 1988 right up until 2006 when, as a part of then Prime Minister John Howard's broader attacks on the rights of workers, the Liberal and National parties saw fit to deny their own public servants rights enjoyed by workers across other jurisdictions in Australia. In fact, South Australia and Tasmania are the only two jurisdictions aside from those in the Comcare scheme that do not provide workers compensation coverage for their employees during recess breaks. It is a right enjoyed by most Australian workers that must be restored to workers covered by the Comcare scheme.

As well as restoring rights, extension of workers compensation coverage to recess breaks removes a substantial number of grey areas. Think about the following situations: an employee leaves work for a coffee with their supervisor to discuss a range of work related issues; an employee takes a work related telephone call on their lunch break; an employee runs into a contact or a colleague on their lunch break and proceeds to have a long conversation about a work related matter; and a group of employees attend a work lunch. Restoration of workers compensation coverage for recess breaks means that workers at workplaces that do not provide on-site lunch facilities are not offered different treatment to workers lucky enough to have on-site lunch facilities. Similarly, work sponsored health and fitness activities that occur off-site during breaks currently leave employees exposed to situations where they are not covered by workers compensation, and have left employers reluctant to encourage off-site health initiatives. I am proud that my local public sector workplaces encourage their employees to get out of the workplace during their unpaid lunch break to undertake community activities, healthy activities and fitness activities. But I am disappointed that the current law acts as a disincentive for people to participate in these healthy activities.

There are plenty of examples around Canberra of healthy lunchtime activities. There are walking clubs, there is netball, Tai Chi, Pilates and Zumba. Department of Defence employees use onsite gyms, badminton courts and pool facilities, participate in lunchtime competitions including volleyball, touch football, basketball and softball, and participate in lunchtime classes including aerobics, weights, resistance training and ballroom dancing. The way the laws currently stand, it is unclear whether the employees would be covered for workers compensation purposes in these situations. Breaks during the working day cannot always be divided neatly into 'working' and 'not working'. We need laws that recognise the diversity and flexibility of working arrangements.

As to time limits, this bill adds further benefits and protections to workers by introducing statutory time limits for the determination of claims. Procedural rights can be just as important as substantive rights to allow people to access their entitlements. Without time limits an application for compensation could technically be allowed to sit with a decision maker for days, weeks, months or years on end before a decision is finally made. Administrative law has long recognised the need for decisions by government to be made in a timely manner. Introducing time limits provides assurance to workers in the Comcare scheme that their claim will be dealt with by a particular date. Making these limits a statutory right rather than an administrative process means that these rights are given greater prominence and certainty. Claimants can rely on the laws to remain constant and reliable.

For those that have suffered an injury at work, uncertainty about their workers compensation claim can cause considerable distress. People who suffer an injury at work, and are unable to attend work as a result, are forced to sit at home and wonder about when they will be able to return to full health and return to work. It can be an incredibly distressing time and it allows plenty of time for the injured worker to worry about their claim and their entitlements. Providing as much assurance and certainty as we can about when and how a worker will know their precise entitlements is a key step forward in ensuring that our workers compensation system is as effective as possible at getting people back into work. Evidence in the Comcare review showed that Comcare had a much lower rate than the national average for assessing and determining claims. Providing statutory time limits should encourage Comcare to provide the same level of service to workers covered under that scheme as workers from other jurisdictions.

I have long supported the principle of policy based on considered evidence. The changes to time limits proposed in the bill arose from the review of Comcare conducted by the Department of Education, Employment and Workplace Relations. Statistics about these time limits leave me convinced that without an adequate statutory requirement workers will continue to be denied important rights with respect to their workers compensation.

One new aspect of this bill, which was not a part of the Comcare review, is the extension of workers compensation coverage to particular areas or particular classes of employees. The bill amends the SRC Act to provide workers compensation coverage for injuries sustained while an employee is working in a 'declared place' outside Australia. This is above and beyond any existing extraterritoriality provisions and will provide additional certainty for employees on overseas postings about their workers compensation entitlements. This means that the relevant minister can declare high-risk places, such as Afghanistan and Iraq, to be places where workers compensation coverage will be continuous for all Commonwealth employees. The very act of being in a dangerous situation, as determined by the minister, means that a worker is deemed to continuously be at work and any injuries sustained while in that dangerous place as a result of work will be compensable.

The changed coverage also applies where a person is a member of a 'declared category' of employees whose work requires deployment to places outside Australia. The need for this flexibility arises specifically in relation to the establishment of the Australian Civilian Corps, who will assist in disaster relief, stabilisation and postconflict resolution in developing countries and failed states. The effect of these changes will be to provide 24/7 coverage under the SRC Act for employees exposed to unusually high risks while working outside Australia.

I spoke recently at the Lowy Institute about the need for targeted, effective foreign aid. The Australian Civilian Corps is very much in this mould. It will provide expertise where it is most needed: after natural disasters or in times of acute stress. We have a duty to help our neighbours and an obligation to provide our expertise on a global scale. But in providing this aid we should recognise that the Australian government still has a role in protecting its people who are sent into these dangerous situations and should ensure that their workers compensation is assured and not left open to interpretation or confusion. Providing continuous workers compensation coverage for such groups will also assure them, both before and during their deployment, that there is a safety net in case anything goes wrong during their deployment.

I am proud to be part of a political party that always seeks to look after the rights of workers. I am proud to be part of a political party that looks after the substantive and procedural rights of people who are unfortunate enough to be injured at work. This bill goes some way to undoing the damage of the Howard years on public servants in Canberra and throughout Australia—those working for the Australian government or the ACT government, as well as non-Commonwealth licensees. I am also proud to be a part of a political party that recognises its obligations when new and challenging situations arise for people carrying out work in our name in places of high risk or danger. I commend this bill to the House.
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Common Ground

I spoke in parliament yesterday about tackling homelessness, through a model known as 'Common Ground'.
Homelessness, 31 May 2011

With her voice shaking and fighting back tears, she says:

'It is horrendous being homeless. You feel so disconnected from other beings and you feel so ashamed to be homeless. I absolutely believed I was worthless and that nothing would change.'

Breaking down, she continues:

'I cannot remember the last time I had a place to call home, somewhere I was safe.'

Asked when the last time she felt safe was, she wipes the tears from her eyes and whispers:

'I cannot remember.'

Suzie, a 39-year-old single mother of two, is one of 570 Australians who by the middle of next year will be living in a Common Ground apartment. Susie will have a place to call home, to feel safe and from which to rebuild her life. Housing affordability and homelessness was the number one issue raised when I held a community sector roundtable in March. In the 2006 census around a thousand Canberrans were recorded as being homeless.

Founded by New Yorker Rosemary Haggerty in 1990, Common Ground offers homeless people permanent, affordable, safe and high-quality supported housing. Common Ground is about providing stability, support and hope to the homeless where there was none before. Currently, Common Ground has projects in Adelaide and Melbourne, with Sydney, Brisbane and Hobart coming on line next year.

Here in Canberra a team of dedicated people have been working tirelessly to provide support and hope to those who are homeless in the ACT through our very own Common Ground project. I hope this project will become an intrinsic part of tackling homelessness in Canberra. Through the project, there are plans to build up to 100 one- and two-bedroom apartments in Reid for singles and families; to provide them with affordable, attractive, well-managed and permanent accommodation; to house the most vulnerable and link them to support services; to offer the safety and security of having a 24-hour seven days a week concierge service; and to provide opportunities for people to regain control of their lives.

I want to pay tribute to the Common Ground board: the Chair, Stephen Bartos; Jon Lovell; Peter Sandeman; Simon Rosenberg; Captain Jennifer Wheatley; Diane Kargass AM; David Mathews; and finally the inspirational program coordinator and the person who has assembled this great team, Liz Dawson.

The last word belongs to Suzie, who says:

'Today I have hope in my life. Today I have a belief that I can try everything. Today it is different. I am somebody. It is an amazing gift I have been given, a second chance to build a life I never thought I would have.'
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Chris Bourke MLA

Congratulations to Chris Bourke MLA



Federal Member for Fraser, Andrew Leigh has congratulated Chris Bourke on being declared the new Member for Ginninderra today.

Dr Bourke is a passionate advocate for Indigenous Australians and brings to the Legislative Assembly his many years of experience in small business and the healthcare sector.

With over 16 years of service as a local dentist, Dr Bourke has a unique insight into the community he now represents. He is an active member in many local community organisations.

Like his predecessor Jon Stanhope, Dr Bourke shares a passion for the Canberra and has worked hard for our city.

I look forward to working closely with Dr Bourke to strengthen our community by boosting employment, assisting small business, delivering better health care and improving education.
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The Power of Information

I moved a private members' motion yesterday on the benefits of putting more information in the public domain.
MYSCHOOL, MYHOSPITALS AND MYCHILD WEBSITES
On the motion of Dr Leigh—That this House:
(1) recognises:
(a)  Australians are keen to have better access to information about government performance;
(b) more transparent public services have been shown to perform at higher levels; and
(c) greater access to information helps Australians make the best choices; and
(2)  commends the Australian Government on the creation of the MySchool, MyHospitals and MyChild websites.

MySchool, MyHospitals and MyChild, 30 May 2011

Four hundred years ago, Sir Francis Bacon made a simple observation. He said, 'Knowledge itself is power.' This motion recognises the transformative power of information. When we put information in the hands of voters we help people make the best choices for themselves and their families. Providing information also helps improve public services which are crucial to boosting productivity growth in Australia. This motion focuses on three websites created by the Australian government: MySchool, MyChild and MyHospitals.

MySchool

The myschool.edu.au website allows schools, teachers, parents and the community to compare schools serving statistically similar backgrounds and to compare all schools in Australia. It allows parents to identify and learn about high-performing schools, including schools in which significant student progress is demonstrated. Under MySchool 2.0, parents can now look at student gain over time and they can learn about the financial resources available to the school. Since the MySchool website was launched at the start of last year, over 5 million people have visited the site.

MyChild

The mychild.gov.au website helps parents find childcare options suitable for their needs. It allows parents to find information about the childcare places in their area and assistance with childcare costs. The website now includes information about vacancies across the full range of age groups and information on both permanent and casual vacancies. In the last 12 months alone, the MyChild website has had over 420,000 visits. The website also links to useful information for parents such as children's health and wellbeing, and parenting and family support services.

MyHospitals

The myhospitals.gov.au website provides information on bed numbers, patient admissions, hospital accreditation, types of specialised services. It also provides national public hospital performance statistics such as waiting times for elective surgery and emergency. It helps patients choose the hospital that is right for them and allows everyone to compare the performance of their local hospital with other hospitals around Australia.

Better Information

These websites were opposed at the time of their creation. Some education insiders opposed the MySchool website. The Australian Medical Association and some state governments opposed the MyHospitals website. The opposition recently has been critical of the updated MySchool 2.0 website, preferring instead to keep financial information secret from Australian families. Opposition to data release has been based around two arguments. First, critics argue the performance measures are imperfect. This is undoubtedly true but it sets the bar too high. We should always strive to improve the quality of information but the perfect should never become the enemy of the good. Second, those who oppose data being released claim it will lead to underperforming institutions being stigmatised. But so long as the data are collected so as to minimise the potential for manipulation and provide the broadest possible set of indicators, it will help identify the strongest and weakest institutions. Rather than allowing poor performance to continue under a veil of secrecy, we should let a little sunlight in.

We also put in evidence that more information raises overall performance. In the case of school reporting, Stanford University researchers Martin Carnoy and Susanna Loeb found strong evidence that those US states that provided more public information about school performance experienced more rapid growth in maths scores. Similarly, Eric Hanushek and Margaret Raymond found that students in countries which published school performance data tended to do better on international exams.

The same is true of hospitals. In his book Better: Asurgeon's notes on performance, medical writer Atul Gawande discusses the impact performance information had on the treatment of cystic fibrosis, a genetic disease that impedes lung capacity. While patients at the average treatment centre would typically live to 33, those at the best centre lived to 47. Over recent decades the life expectancy of cystic fibrosis patients has increased substantially as treatment innovations have percolated down to the leading centres.

Making school and hospital performance information publicly available should help everyone. There are good reasons to think the poor may benefit more than the rich. In a low-information environment, information is restricted to insiders who share it with their friends. Publishing statistical data helps democratise access to information, allowing everyone to see what the insiders already know. The more comprehensive public data is, the less individuals need to rely on questionable sources of information.
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Bob Gould

I spoke in parliament yesterday about the passing of left-wing activist and Newtown bookseller Bob Gould.
Bob Gould, 30 May 2011

I rise to pay tribute to Newtown bookseller Bob Gould, who passed away on 22 May 2011 aged 74. Bob was part of the progressive left in Australia for the better part of the post-war era. From the Vietnam War to asylum seekers, he has marched and argued for what he believed in. As former New South Wales MLC Meredith Burgmann noted, 'He was involved in most of the great political protest movements of the time.'

Bob did live through interesting times. He was one of three people who chased down and restrained the man who tried to kill Arthur Calwell after an anti-conscription rally in 1966. His bookstores were raided for stocking such scurrilous works as Philip Roth's Portnoy's Complaint and pictures of Michelangelo's David.

Most students who attended the University of Sydney have a story about Gould's Books. Mine came when I was walking down an aisle and brushed past two precarious stacks of books on either side. Both collapsed on me, trapping me for about five minutes, until Bob heard my cries for help and ambled over.

Although he was a Labor Party member Bob was probably to the left of everyone in the current federal parliament. Yet even my libertarian friend Sinclair Davidson has noted Bob's passing, and recalled fondly his time buying books at Bob's bookstore. Through his activism and his bookstore, Bob Gould injected ideas and energy into the public debate. He will be missed.
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A Plain Suggestion

My AFR op-ed today discusses the evidence in favour of plain packaging for tobacco as a way of reducing smoking rates.
Cigarettes: The Plain Facts, Australian Financial Review, 31 May 2011

A family friend has been a chain smoker for the past sixty years. Last week, doctors discovered the cancer that has eaten away at his larynx. If he wants to get rid of it, he will need an eight-hour operation, which will leave him speaking through an artificial voicebox. As you read this, he is deciding whether it might be better just to give the game away altogether.

If tobacco had been discovered in 2011, it’s unlikely that most developed countries would legalise it. Uniquely, smoking is harmful even in small doses. This makes it unlike other legal vices, which can be consumed in moderation. The occasional double whiskey or deep-fried mars bar won’t kill you – but as the ad says ‘every cigarette brings cancer closer’.

Because cigarettes are such an abnormal product, the government is aiming to take away one of the tobacco industry’s last avenues for promotion: an attractive pack design. Described as ‘the silent salesman’, cigarette companies have long relied on slick packets to communicate to consumers not merely the desirability of their product, but also to reach out to particular target groups, such as youth, women, or consumers wanting a milder product.

In marketing jargon, cigarettes are known as a ‘badge product’, because the packaging is frequently displayed to others. As one industry insider put it, ‘if you smoke, a cigarette pack is one of the few things you use regularly that makes a statement about you. A cigarette pack is the only thing you take out of your pocket 20 times a day and lay out for everyone to see. That’s a lot different than buying your soap powder in generic packaging.’

Plain packaging isn’t just about replacing blue chevrons, sunsets, luxury golds and powerful blues with a decidedly un-sexy olive green background. It’s also about increasing the impact of the health warnings, since past research has shown that people take health warnings less seriously when they sit alongside brand imagery. With pictures of diseased teeth and eyes, mock-ups of the new cigarette packages look like something out of a medical textbook.

Yes, but will it work? Although no country has yet implemented plain packaging, medical researchers have run a spate of laboratory experiments to see how people’s perceptions of cigarettes change as design elements are progressively removed from the pack. For example, a 2009 study by Daniella Germain and coauthors recruited Australian adolescents (smokers and nonsmokers). The researchers then randomly showed them either regular cigarette packages, plain packages, or something in between. As branding was removed, adolescents became less positive about the kinds of people who smoked that cigarette, and more negative about its taste.

The laboratory evidence accords with what the tobacco industry has found in its street surveys. One marketing report (released as part of the US tobacco settlement) mournfully noted: ‘when we offered them Marlboros at half price – in generic brown boxes – only 21% were interested, even though we assured them that each package was fresh, had been sealed at the factory and was identical (except for the different packaging) to what they normally bought at their local, tobacconist or cigarette machine.’

Not surprisingly, the tobacco industry has reacted vehemently to plain packaging legislation, arguing that it will lead them to cut prices. From an economic standpoint, it is hard to see why this should occur. Price wars are generally a reaction to a temporary change in market conditions (such as the entry of a highly-leveraged competitor) – not to long-run changes in the market environment. The industry has also claimed that plain packaging will boost the illegal market, a strange claim given that many black market cigarettes are already sold in plain packages.

Since the 1980s (when I was an adolescent), the national smoking rate has fallen from 31 percent to 17 percent. Yet the smoking rate remains considerably higher for disadvantaged groups: 26 percent among people living in low socioeconomic areas, 34 percent among Indigenous Australians, and 38 among the unemployed. Smokers in these groups also consume 15-20 percent more cigarettes than the average smoker.

If we are to close the life expectancy gap between rich and poor, and between Indigenous and non-Indigenous Australians, then cutting smoking rates is vital. Along with higher cigarette taxes, subsidised nicotine patches and anti-smoking advertisements, plain packaging should help reduce cigarette consumption. It may be too late for my family friend, but there’s still time to make smoking an ugly choice for today’s youth.

Andrew Leigh is the federal member for Fraser.
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Tobacco Donations


Private Members' Business
Tobacco Products, 30 May 2011


Each year 15,000 Australians die from smoking. That means 41 people a day. By the time this debate has concluded, an Australian will have died because she smoked. We also know that smokers harm those around them—children who inhale passive smoke, or the one-in-six babies born to mothers who smoked while pregnant. Smoking rates in regional areas are twice as high as in the cities, and people in the bush have higher death rates from lung cancer, heart disease, asthma and chronic obstructive pulmonary disease.

These are the stark realities of smoking. Yet there remain groups in this place that continue to profit from this reality. The self-proclaimed party of responsibility refuses to take responsibility for the devastating impact of tobacco on Australians' health. And the self-proclaimed party of the bush shows less concern for the health of rural Australians than the property rights of tobacco companies.

Last week I received an email from a constituent about why we should support the Prime Minister and the Minister for Health and Ageing in their efforts to reduce smoking rates. The constituent wrote:

'My great-grandfather, grandfather, father and one of my uncles all died from smoking-related conditions. Each of the latter three died 20-30 years before the life expectancy for their generation. My father's addiction contributed to two decades of poor health prior to his premature death, resulting in frequent periods where he was unable to work.

'My siblings and I grew up in poverty, the effects of which are still evident, and the taxpayer bore the cost of his many hospitalisations as well as the cumulative years of income support our family depended on in lieu of employment. I say this so that you will understand my absence of sympathy for the 'principle argument', that tobacco companies have a right to make a profit from pushing legal drugs.'

I was proud to join the Minister for Health and Ageing and the Minister for Indigenous Health earlier this year at the launch of an ad campaign designed by Indigenous Australians to help reduce Indigenous smoking rates, rates that are twice as high as for non-Indigenous Australians and a major contributor to the life expectancy gap. Yet those opposite seem set on blocking common-sense reforms like higher tobacco excise or the plain packaging of cigarettes. As with their stance on climate change, they are the ‘Party of No'. There is a precedent for this kind of nay-saying. Former opposition leader Billy Snedden said about the link between smoking and diseases such as lung cancer and heart disease: 'So far I have not seen any conclusive evidence to that effect and, as I understand the position, there is still some argument on the question.' The Leader of the Opposition today is like his predecessor of yore. Mr Abbott's denial of the science of climate change is the modern-day equivalent of Billy Snedden's denial of the link between smoking and cancer.

In Merchants of Doubt, Naomi Oreskes and Erik Conway document some remarkable parallels between the debate over climate change and earlier debates over tobacco smoking, acid rain and the hole in the ozone layer. In each case, those opposed to action tried to sow doubt. Oreskes and Conway quote a 1969 memo in which a tobacco industry executive makes clear the strategy: 'Doubt is our product, since it is the best means of competing with the body of fact that exists in the minds of the public.'

As late as 1995, Senator Minchin doubted the link between smoking and adverse health effects, yet even he has now come around. If a warhorse like Senator Minchin can change his mind and accept the science, there is hope for anyone. The Leader of the Opposition wrote in his book Battlelines:

'Conservatism prefers facts to theory, practical demonstration to metaphysical abstraction; what works to what's in the mind's eye … Conservatives are not optimists or pessimists but realists.'

On both climate change and smoking, the science is settled—and the solutions are clear. All that stands  in the way are big polluters and big tobacco.

I know there are some in the Liberal and National Parties who are concerned about going cold turkey on accepting donations from big tobacco. But I can assure them that we will help them through this. We can offer them counselling. We will walk them through this. And they will have the best nicotine patch of all: the knowledge that they have, at long last, done the right thing for the health of young Australians.
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Commonwealth Pensions

I spoke last week about retirement benefits for military personnnel and former public servants.
Indexation of Military Pensions, 23 May 2011

The indexation of military pensions and superannuation is an issue that, as the member for Fraser, I am very familiar with. Over at least the last year I have been working with colleagues Senator Kate Lundy, Mike Kelly, the federal member for Eden-Monaro and Gai Brodtmann, the member for Canberra, along with the Defence Force Welfare Association, the Superannuated Commonwealth Officers Association and the Australian Council of Public Sector Retiree Organisations, in making representations regarding the indexation of military superannuation pensions as well as those for Commonwealth employees. This is an important issue that affects the lives of many in my electorate and others who have given committed service to the Australian public and the interests of our nation. Reforms to the indexation of military superannuation pensions must be undertaken in a responsible and sustainable manner, one that requires the economic understanding and responsibility that the Labor government has shown in guiding Australia through the global financial crisis and returning the budget to surplus in 2012-13.

The Defence Force Retirement and Death Benefits Amendment Bill 2011 demonstrates yet again the divisive approach of the opposition and the fact that once again they cannot be entrusted with fiscal matters and matters as important as the ongoing funding of military superannuation pensions. Those who have served in the protection of our nation deserve better than fiscal incompetence and recklessness in their retirement livelihoods.

Military service is a special vocation with unique requirements. These include the compulsory and continuous liability for combat operations; being subject to both the civil legal code and a separate Defence Force disciplinary code to support command structures for effective conduct of combat operations and training; the requirement to work long and irregular hours for which no overtime is payable; separation from families, sometimes for considerable periods of time, which as I know with many Defence Force members in my electorate can be a cause of stress to both members and their families; the posting of members at regular intervals to meet Australian Defence Force manning requirements; and the requirement to maintain a high standard of both physical and mental fitness required to meet operational tasks and training for combat.

In recognition of the demands these requirements place on Defence Force personnel, military superannuation is one of the key elements in the competitive remuneration and conditions of service package provided to Australian Defence Force members. Established by the Keating government in 1991, the Military Superannuation and Benefits Scheme was introduced to address major changes the government had made to both the regulatory system and the regulations governing superannuation. The Defence Force Retirement and Death Benefits Scheme provides an indexed pension calculated on a combination of salary and length of service. Members who discharge after 20 years are able to take an immediate lifetime pension based on 35 per cent of the member's salary at discharge. These pensions, which can be taken as early as 38 years of age, continue to be paid even if the former member returns to the workforce. The percentage of final salary increases with each year of service. For example, at 30 years of service the pension is 51.25 per cent of final salary and at 40 years of service it is 76.5 per cent of final salary. As at 30 June last year, there were 3,978 pensioners in the Defence Forces Retirement Benefits scheme, and 4,246 contributors and 53,003 pensioners—15,193 of those under the age of 55—in the Defence Force Retirement and Death Benefits scheme. Military superannuation arrangements are based on salary and the length of a member's period of service. They are not based on, nor do they aim to reflect, a member's needs in retirement. To change military superannuation indexation arrangements would effectively mean a change to a member's preretirement conditions of service after the member has retired.

If allowed to proceed, the opposition's bill would present several issues. Firstly, a proposed law that would appropriate revenue or moneys cannot originate as a private member's bill, and a bill for such a law cannot originate in the Senate. Secondly, the Defence Force Retirement and Death Benefits Amendment (Fair Indexation) Bill as introduced by Senator Ronaldson would have a fiscal cost of $1.7 billion over four years and an underlying cash cost of $175 million over four years. It would increase the Commonwealth unfunded liabilities by $6.2 billion. Yet it would provide nothing more to recipients of the Commonwealth civilian superannuation pension. Indeed, the opposition's view of public servants was made clear by the member for Fadden, who clearly suggested that savings to pay for these pensions should be made up by Public Service cuts. The opposition's bill would also provide nothing to many recipients of military pensions.

On 9 February 2011, along with Senator Lundy and the members for Canberra and Eden-Monaro, I wrote to Senator Penny Wong asking that the Department of Finance and Deregulation estimate the costs regarding indexation changes in Commonwealth government civilian and military superannuation scheme pensions. The department's estimate stated that, firstly, the cost of indexing military and civilian pensions by the age pension methodology would be $322 million for the period 2011-12 to 2014-15, with an immediate increase in unfunded superannuation liabilities of $32.9 billion. Secondly, the cost of indexing military and civilian pensions by the higher of CPI, the pensioner and beneficiary living cost index and the increase in male average total weekly earnings would be $614 million for the period 2011-12 to 2014-15, with an immediate increase in unfunded superannuation liabilities of $47.8 billion.

Thirdly, and most importantly, the proposals in this bill would only benefit a minority of military superannuants. The bill does not provide any indexation change for the 3,978 benefit recipients from the Defence Forces Retirement Benefits scheme. The bill does not provide any change for any of the 7,684 pensioners under the Military Superannuation and Benefits Scheme. Nor does this bill provide for the 15,193 Defence Force Retirement and Death Benefits scheme recipients under age 55. Nor does it provide for the needs of Commonwealth civilian superannuants.

The coalition's policy to index military pensions for members of the Defence Forces Retirement Benefits scheme and the Defence Force Retirement and Death Benefits scheme who are aged 55 and over would not provide financial security for Australian Defence Force personnel. Superannuation pensions paid by the government to its retired military personnel are indexed twice annually to reflect quarterly changes in the price of a basket of goods and services which account for a high proportion of expenditure by the consumer price index population group.

The Gillard government honoured its 2007 election commitment to review the indexation arrangements for superannuation pensions that it pays to retired civilian employees and military personnel. The review of pension indexation arrangements in Australian government civilian and military superannuation schemes was conducted by Mr Trevor Matthews. In December 2008 the Matthews report of the review of pension indexation arrangements in Australian government civilian and military superannuation schemes recommended that pensions continue to be indexed against CPI to protect against inflation increases. The report also identified very significant additional costs that would be incurred if indexation methodology were changed. The Australian Government Actuary has also pointed to significant additional costs if the coalition policy, the subject of this bill, were adopted. The significant costs of higher indexation would have to be found from the Consolidated Revenue Fund or from the existing defence budget. This would jeopardise the funding of other initiatives. Over recent years, various groups have campaigned to change the indexation of public service and military pensions from the CPI to an analytical cost of living index. They have argued that compared to other pensions their level of indexation is not fair or equitable in terms of being able to maintain contemporary living standards, and that the CPI is ineffective as a measure of the change in the cost of living. Recommendation 4 of the Matthews report indicated that if a more suitable index became available the government should consider its use. With the adoption of the pensioner and beneficiary living cost index for age and other pensions, I am hopeful that such an index for Commonwealth superannuants, including those on defence pensions, will soon be developed.

ADFA and the Royal Military College of Australia are in the electorate of Fraser, and on 10 April I represented the Prime Minister and laid a wreath commemorating the 70th anniversary of the siege of Tobruk at the Rats of Tobruk memorial. I had the privilege of sitting next to Peter Collins, a veteran who was a signal operator at Tobruk. I am proud of the commitment and dedication of the men and women who provide military service to our nation every time I meet with them in my role as federal member.
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Taking off from Gloomy World

Back in 2006, Justin Wolfers and I took issue with a pair of UK researchers who'd claimed that Australians ranked poorly on international surveys of happiness and life satisfaction. I'm delighted to say that new OECD findings back up our optimism. A good news story indeed.

Update: For a fair dinkum shake of the sauce bottle, have a geeze at Justin Wolfers bonzer post.
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Tax Reform

I spoke in parliament this week about the long-term tax reforms in the budget - particularly the phasing out of the old-fashioned Dependent Spouse Tax Offset, removing perverse Fringe Benefits Tax incentives for cars, and replacing the Entrepreneurs' Tax Offset with more effective measures.
Appropriation Bills, 23 May 2011

David Lloyd George, the founder of the modern welfare state, said:

'We put no burden upon the necessities of life of anyone. We are taxing surplus. We are taxing luxuries. If a man has enough after maintaining his wife and family, and can spare something upon whisky and tobacco, why should he not afterwards contribute towards the pensions and defences of the country?

'We propose a great scheme in order to set up a fund in this country that will see that no man suffers from hunger in the dark days of sickness, breakdown in health, and unemployment which visits many of us This is what we are going to do. These schemes for the betterment of the people ...'

This government is also putting in place schemes for the betterment of Australians. We are implementing a carbon price to deal with dangerous climate change—a carbon price that will operate by taxing the 1,000 biggest polluters—putting a price on pollution that recognises the damage that that carbon pollution does to future generations. We are helping families by providing assistance in those crucial times of need. We are implementing a minerals resource rent tax so that Australians get a fair deal for the subsoil resources that are their birthright. The Labor government helped Australia to navigate the global financial crisis. When the largest downturn since the Great Depression beckoned, we listened to Keynesian economics. We put in place a timely, targeted and temporary fiscal stimulus that protected around 200,000 jobs and tens of thousands of businesses. We used the opportunity to invest in long-term infrastructure, roads and school infrastructure that future generations will benefit from.

This budget is delivering the fastest fiscal consolidation of the modern era. Just as we implemented Keynesian economics in the downturn, we are implementing Keynesian economics in the upswing, through rapid fiscal consolidation. We are reforming our system of taxation. We want the Australian taxation system to be simpler and fairer. We want it to be a system that most efficiently delivers essential social, educational and health services while providing the incentives to keep our economy growing.

I want to focus today on the tax incentives introduced in the most recent budget, because I think that these are initiatives which have received too little attention and that this budget that is marked by its deep commitment to lasting tax reform. The government has announced 12 measures since the 2010-11 budget to reform our taxation system, including (1) a measure that removes the unintended tax incentive for people to drive further than they need to in order to obtain a larger tax concession by reforming the statutory formula method for valuing car fringe benefits. That measure implements recommendation 9 of the Henry tax review. (2) We have improved participation incentives for couples without children by phasing out the dependent spouse tax offset, consistent with recommendation 6(a) of the Henry review. (3) We are better targeting tax incentives by replacing the entrepreneurs tax offset, consistent with recommendation 6(c). (4) We are improving small business tax rules by replacing the entrepreneurs tax offset with a small business tax package that includes a $5,000 immediate deduction for motor vehicles, consistent with the intent of recommendation 29. (5) We are improving certainty for investors by allowing infrastructure projects of national significance to carry forward losses with an uplift factor to maintain their value. (6) We are increasing support for families by increasing family tax benefit part A payments for 16-to-19-year-olds, recognising that the cost of looking after teenagers does not go down. (7) We are reforming family payments by reducing the overlap between family tax benefit part A and youth allowance. (8) We are improving regulation and reducing red tape for the not-for-profit sector by establishing the Australian Charities and Not-for-profits Commission. (9) We are improving certainty for the not-for-profit sector by introducing a statutory definition of 'charity'. (10) We are improving tax system governance by committing to a principles based approach to tax law design. (11) We are allowing the Board of Taxation to initiate its own reviews of how tax policies and laws are operating. (12) We are establishing a New Tax System Advisory Board.

Entrepreneurs' Tax Offset

This budget and these important tax measures build on the Gillard government's long-term plan to strengthen our economy and make the Australian tax system simpler and fairer for business and the community. In the case of the entrepreneurs tax offset, it has long been recognised that it is poorly targeted for small businesses. There is little evidence that it has acted to encourage the establishment of small businesses. More than 80 per cent of small businesses were eligible for the offset. Rather than allowing a small business to grow, the entrepreneurs tax offset encourages businesses to structure affairs in a particular way despite the market opportunities which might be present. The assistance provided is a fairly low level of assistance to very small businesses. The maximum claim is $2,500 but the average entrepreneurs tax offset claim was less than $500, with 70 per cent of claims being below $600. That is a small amount of money for a fair bit of paperwork. The vast majority of claimants have income from sources other than business income and nearly all are individuals. Under the entrepreneurs tax offset, it is possible for taxpayers to recharacterise their income as business income—for example, by working as a contractor instead of as an employee in order to claim the ETO.

The entrepreneurs tax offset is difficult to administer and adds to the complexity of our tax system. There are better and more effective ways to help small businesses: such as the $5,000 immediate deduction for motor vehicles from 2012-13 that was a hallmark feature of this government, such as reducing the GDP adjustment factor for pay-as-you-go instalment taxpayers to four per cent for 2011-12, such as simplifying and increasing the instant asset write-off threshold to $5,000 from 2012-13, and such as providing a head start to the reduction in the company tax rate for small businesses from 30 per cent down to 29 per cent from 2012-13. Around 2.7 million small businesses stand to benefit from these measures. The savings from abolishing the entrepreneurs tax offset will fund those progressive measures for assisting small businesses. Those savings will be reinvested into the small business tax reform package.

Dependent Spouse Tax Offset

We are also modernising Australia's taxation system by removing antiquated notions about gender roles. The dependent spouse tax offset was introduced back in 1936 at a federal level, although some of the states had their own small programs at the time. During the second reading debate in this place, one member justified the measure, saying that he felt it was the duty of a husband to maintain his wife and therefore it was right and proper that he should receive a deduction for it. I do not think these are sentiments that would be shared by most 30-somethings in the labour force today. This is a measure for families without children, and I think that most modern-day couples would not expect the government to provide a tax break in the case where one partner chooses not to work. This measures is not just about removing antiquated notions but about encouraging greater workplace participation, because it phases out the dependent spouse tax offset, which penalises work for stay-at-home spouses. And, as we know, increasing participation is absolutely critical in a modern Australia with our businesses facing skills shortages. Work is a good way of maintaining contact with the community and a first job is a stepping stone to a better job. We in the Labor Party are strongly committed to the dignity and value of work.

If a dependent spouse earns more than $282, under the current program the entitlement reduces by $1 for every $4 that the dependent spouse's income is above this threshold. The effect of that is to put in place a 25 per cent tax rate additional to current marginal tax rates on the first $10,000 earned by a so-called dependent spouse. This measure will be progressively phased out for those aged 40 years and below. And, importantly, those taxpayers who are invalid or permanently unable to work or are carers or who are aged 40 or above will not lose their benefits.

Fringe Benefits Tax on Cars

The budget also introduces important measures to fix the current system of fringe benefits taxation for cars. The existing statutory formula method for determining the taxable value of car fringe benefits delivers a greater tax concession the further a car is driven. Anecdotes in my own electorate about people who pass the keys onto their teenage child to drive to the coast for a weekend do not reflect the way in which most Australians would want to see their tax expenditures used. Car fringe benefits arise when an employee uses a salary sacrificed or employer provided car for private use. Under the statutory formula method, a person's car fringe benefit is determined by multiplying the relevant statutory rate by the cost of the car. These statutory rates are designed so that a person's car fringe benefit decreases as the distance travelled by their vehicle increases. People can therefore increase their tax concession by driving their vehicle further. The AFTS Review reported evidence that this is exactly what people do.

We are removing the current incentive for people to drive salary sacrificed and employer provided vehicles further to increase their tax concession and in the process burn more fuel and damage the atmosphere. We are reforming the statutory formula method by replacing the current statutory rates with a single rate of 20 per cent that applies regardless of the distance travelled. This reform will only apply to new vehicle contracts entered into after announcement on budget night. It will not affect people who have already entered into contracts, and will be phased in over four years.

People who use their vehicle for a significant amount of work related travel will still be able to use the operating cost and log book method to ensure that their car fringe benefit excludes any business use of their vehicle. Over the forward estimates, this reform will result in an increase in revenue of $970 million, an increase in GST payments to the states of $50 million and a reduction in other expenditure of $33.9 million.

We are also helping small business through the immediate depreciation deduction, which now applies to motor vehicles. The additional benefits that we are putting in place will assist many small businesses in Australia. The vast majority of businesses operating in Australia, around 96 per cent, are small businesses. They often experience greater cash flow difficulties than their larger counterparts. The Gillard government looked after those small businesses when the global downturn happened. We did that because we recognised that small businesses were much more vulnerable than large businesses, which are better able to smooth over the economic cycle. Our economic reforms recognise that small businesses are very much the lifeblood of the Australian economy. We are reforming things like the entrepreneurs tax offset in order to assist small businesses and to give small business owners the certainty that they need in assisting our economy.

Conclusion

With taxes, we build society. Tax reform needs to be grounded in good, strong economics. It needs to reflect the values of Australian and we need to recognise when those values change. When values about environmental protection change, we need to reform fringe benefits systems that create perverse incentives to drive cars further. When norms about dependent spouses change, we need to reform old tax laws that are based on outdated 1930s notions. We need to keep on making these updates because we in the Labor Party recognise that economic reform is not something that we do once and then forget about. It is an ongoing process. It is important that we engage in that ongoing process and use opportunities like the Henry tax review, which has laid down many of the key principles important in devising the architecture of Australia's tax system. It is important that—as we in the government do in the case of climate change—we listen to the advice of economists and take into account that our tax system needs to be shaped by expert advice. Those in the opposition are sometimes too willing to go for the quick sound bite and too willing to ignore expert advice on climate change and tax reform. We in the Labor Party are committed to ongoing economic reform and to improving our tax system so that it is simpler, fairer and as efficient as possible.
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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | [email protected] | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.