Page 2366 - Week 08 - Wednesday, 29 August 2007
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Proposed expenditure agreed to.
Proposed expenditure—Part 1.9 Superannuation Provision Account, $130,500,000 (capital injection) and $15,780,000 (payments on behalf of the territory), totalling $146,280,000.
MR MULCAHY (Molonglo) (5.03): Gains in superannuation assets have been higher than expected in recent years, as demonstrated by the positive adjustments for expected long-term capital gains on superannuation assets. In discussing the item for the Department of Treasury, I have already discussed the importance of excluding these gains from the cited figure for the government’s bottom line. I will not repeat my remarks this afternoon, except to say that the government’s position is quite indefensible in light of what I have outlined in my remarks on the subject and, more importantly, the remarks of Professor Allan Barton, as published in the Canberra Times.
These higher than expected long-term capital gains on superannuation assets have given the government an ideal opportunity to accelerate its plan to fully fund superannuation liabilities by 2030. Currently, defined benefit superannuation entitlements owing to current and former ACT public servants are underfunded. As at 30 June 2007, they were estimated to be 65 per cent funded by superannuation assets. Obviously, in an ideal world, we would have outstanding liabilities to public servants and former public servants matched by assets invested on their behalf.
I am not suggesting that there will necessarily be a shortfall in assets to make payments. Because these are future payments, I am quite sure we can be comfortable that the government can meet these payments, as long as its targets are based on sound actuarial advice. Nevertheless, it is prudent to take a good opportunity when you are presented with one, and the higher than expected returns on superannuation potentially give the government such an opportunity. I hope it will not be too rigid to consider it. Unfortunately, this looks to be unlikely.
During the committee hearings on 26 June, Mr Roger Broughton, Executive Director of the Investment and Economics Division of the Department of Treasury, told the committee that the 2030 funding date “is more or less set in concrete, if you like”. The Chief Minister did not put it in these terms, but, when asked to confirm these comments, he stated only that the 2030 target date is the government’s current stated funding policy.
As I said when discussing the territory banking account, the government is undertaking a review of the prospect of considering environmental, social and governance factors in its investments. This could potentially include superannuation investments, depending upon the government’s response to this review. I again stress that this review must be about how to maximise the government’s investment returns and it should not compromise this goal. This is particularly important within the context of superannuation investment, given that the government’s superannuation liabilities are underfunded.
DR FOSKEY (Molonglo) (5.06): No doubt the government and Treasury are watching nervously as the US subprime meltdown continues to exert downward
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