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2013-2014-2015
THE PARLIAMENT OF THE COMMONWEALTH OF
AUSTRALIA
HOUSE OF REPRESENTATIVES
DEFENCE LEGISLATION AMENDMENT
(SUPERANNUATION AND ADF COVER) BILL 2015
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Assistant Minister for Defence, the Hon
Stuart Robert MP...)
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GENERAL OUTLINE
DEFENCE LEGISLATION AMENDMENT
(SUPERANNUATION AND ADF COVER) BILL 2015
OUTLINE
The Defence Legislation Amendment (Superannuation and ADF Cover) Bill
2015 (Consequentials Bill) is part of a package of three Bills to establish the
Australian Defence Force Superannuation Scheme (ADF Super) and facilitate
the introduction of the Australian Defence Force's new workforce model by
providing permanent members of the Australian Defence Force (ADF) access to
flexible service arrangements.
The other two Bills in the package are:
The Australian Defence Force Superannuation Bill 2015 (ADF Super) which
gives effect to the Government's announcement to introduce a new modern
superannuation arrangement for people joining the ADF on and after 1 July
2016. The new arrangements will allow ADF members to choose which
superannuation scheme they belong to and, for the first time, give those
members the ability to transfer their accumulated ADF Super benefits to a
scheme of their choice when they leave the ADF; and
the Australian Defence Force Cover Bill 2015 (ADF Cover) which provides
for standalone statutory death and invalidity cover for members of ADF
Super and those who would have been ADF Super members but for
choosing another scheme to which the Department will make employer
contributions. ADF Cover is to be deemed to be an exempt public sector
superannuation scheme and benefits paid from the ADF Cover arrangements
will be treated as payment of superannuation benefits.
Also included in the package are exposure drafts of both the Australian Defence
Force Superannuation Trust Deed and the Military Superannuation and Benefits
Amendment (Trust Deed - ADF Super Consequential) Instrument 2015 which
effects consequential changes to the MSBS Trust Deed and Rules. This is to
facilitate the measure and to make some administrative changes to reduce red
tape.
Financial Impact Statement
Schedules 1 and 3 of the Bill will have no financial impact. However, the
measures in Schedule 2 may have a financial impact depending on the number
of ADF members who apply for and are approved for flexible service
arrangements.
If the numbers do not increase above current levels of Defence Force Retirement
and Death Benefits (DFRDB) and Military Superannuation and Benefits Scheme
(MSBS) members taking part-time leave without pay in order to work flexibly,
there will be no additional financial impacts flowing from the new measure.
However, if there is an increase in numbers rendering flexible service as a result
of the new arrangements, then the financial implications flowing will need to be
addressed within the funding provided to the Defence budget. The actuary did
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not undertake any financial assessment of the implications because there was
insufficient information that could be provided to support any such assessment.
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NOTES ON CLAUSES
Clause 1: Short title
3. Clause 1 provides for the short title of the Act to be the Defence Legislation
Amendment (Superannuation and ADF Cover) Act 2015 (the Act).
Clause 2: Commencement
4. Clause 2 is the commencement provision for the Act and includes a table
setting out the details of the commencement of sections of the Act. Column 1 of
the table sets out the provisions in numbered items, column 2 sets out the
commencement and column 3 sets out date/details. Information in column 3
(which is currently blank) does not form part of the Act, so information can
subsequently be inserted in the column (or edited) in a published version of the
Act.
5. Item 1 in the table provides that sections 1 to 3 of the Act and anything in
the Act not covered elsewhere in the table commences when the Act receives
Royal Assent.
6. Item 2 in the table provides that the main amendments in Schedule 1 (to the
Defence Act 1903, the Defence Force Retirement and Death Benefits Act 1973,
the Future Fund Act 2006, the Governance of Australian Government
Superannuation Schemes Act 2011, the Income Tax Assessment Act 1997, the
Military Rehabilitation and Compensation Act 2004, the Military
Superannuation and Benefits Act 1991, the Superannuation Act 2005, the
Superannuation Industry (Supervision) Act 1993 and the Superannuation
(Resolution of Complaints) Act 1993) commence at the later of the day after
Royal Assent to the Act and the commencement of the Australian Defence
Force Superannuation Act 2015 (ADF Super Act). If the ADF Super Act does
not commence, the amendments in Schedule 1 do not commence.
7. Item 3 in the table provides that the flexible service arrangements set out in
Schedule 2 commence at the later of Royal Assent and 1 July 2016.
8. Item 4 in the table provides that amendments that are contingent on the Acts
and Instruments (Framework Reform) Act 2015 set out in Schedule 3 commence
at the later of the commencement of Schedule 1 of the Act and the
commencement of Schedule 1 of the Acts and Instruments (Framework Reform)
Act 2015.
9. A note to the reader stipulates that the table only relates to the provisions
originally enacted and will not be amended to reflect later amendments to the
sections of the Act.
Clause 3: Schedules
10. Clause 3 provides that amendments to legislation contained in the Act are
set out in the Schedules to the Act and any other item in a schedule to the Act
has effect according to its terms.
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SCHEDULE 1 - MAIN AMENDMENTS
PART 1 - AMENDMENTS
Defence Act 1903
11. The amendments to the Defence Act 1903 in this part are needed to
implement ADF Super and ADF Cover and are an important part of the
introduction of the new military superannuation arrangements.
12. Item 1 makes amendments to Part IIIAA of the Act. It repeals the original
heading from 'Part IIIAA - Superannuation Benefit' to reflect an expanded
Part IIIAA that will deal with several matters associated with superannuation for
members of the ADF. The superannuation benefit referred to in the original
heading is the benefit provided in section 52 under a determination by the
Minister (the Defence Force (Superannuation) (Productivity Benefit)
Determination 1988). Section 53 provides that the trustee of the scheme
established by the Determination for the purposes of the Superannuation
Contributions Tax (Assessment and Collection) Act 1997 is the Commonwealth
Superannuation Corporation (CSC). Neither section 52 nor 53 are being
changed.
13. Item 2 inserts new sections 52A and 52B after section 52 of the Defence
Act 1903.
14. Section 52A sets out the Department's employer contributions for members
of ADF Super and for those ADF members who would have been ADF Super
members but for choosing another scheme into which the Department is to make
employer contributions. The reason for including the Department's employer
contribution rate in the Defence Act is to set the employer contribution rate for
ADF Super members and ensure that rate applies to ADF members who have
chosen another scheme to which the Department is to contribute. Without this,
the Department would only be required to contribute at the rate set out in the
superannuation guarantee laws to avoid incurring a superannuation guarantee
liability under the Superannuation Guarantee (Administration) Act 1992 (SG
Act).
15. The Department is the employer and ADF members are deemed to be
employees for the purposes of the SG Act.
16. Subsection 52A(1) provides that the section applies to persons who are
members of ADF Super or would have been members of ADF Super, except
that they have nominated an alternative superannuation scheme into which the
Department is to make employer contributions.
17. Subsection 52A(2) sets out the employer contribution rate will be 16.4% of
ordinary time earnings paid by the Department in the pay period.
18. Subsection 52A(3) defines several terms which are used in the section
including the term ordinary time earnings which are basically the member's
fortnightly salary and any additional allowances that may be paid in the
fortnight in recognition of the unique nature of military service, excluding any
deductions as a result of any salary sacrifice arrangement the member may have
entered into with the Department.
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19. Section 52B provides that the Department may disclose personal
information to CSC, the trustee of the DFRDB scheme and the MSBS. The
amendment is for the purpose of facilitating the effective working of the
DFRDB and MSBS. The information that can be provided is appropriately
limited for the purposes of determining an entitlement to invalidity benefits
under those schemes, with those receiving the personal information maintaining
a legitimate interest in that information.
20. There is no requirement for the Department to pass on such information, but
may do so and would generally seek the member's agreement before passing on
the information.
21. Note 1 to section 52B provides that the section is authority for the
Department to pass on information in respect of DFRDB and MSBS members
who may be entitled to invalidity benefits under those schemes.
Defence Force Retirement and Death Benefits Act 1973
22. The amendments to the Defence Force Retirement and Death Benefits Act
1973 (DFRDB Act) are necessary because the current provisions in that Act for
those in receipt of DFRDB retirement pay who return for a further period of
service cannot continue to apply. However, the current provisions will continue
to apply for those DFRDB retirement pay recipients whose further period of
service spans 1 July 2016 (until the DFRDB recipient member satisfies the
undertaking for that further period of service).
23. The current arrangements are that all DFRDB retirement pay recipients who
return (re-enter) for a further period of ADF service must make an election
before commencing their further service. If no election is made (or the person
elects to become a MSBS member), the re-entered member becomes a MSBS
member by operation of the law and they are MSBS members for all subsequent
periods of service.
24. Once a DFRDB retirement pay recipient becomes a MSBS member, the
DFRDB retirement pay is suspended and continues to grow with increases in the
consumer price index until MSBS membership ceases, when the retirement pay
is reinstated.
25. If the retirement pay recipient does not elect to become a MSBS member,
then that person must make a different election depending on the length of the
period of further service to be undertaken.
Re-entry for less than 12 Months
26. DFRDB retirement pay recipients who re-enter for less than 12 months must
elect not to become a MSBS member if they want to continue to receive their
retirement pay for the period of further service. If a valid election is made, no
superannuation contributions are made during the period of further service
(although the person accrues a DFRDB productivity benefit which is effectively
a superannuation guarantee top-up amount that is paid as a lump sum from
consolidated revenue when the service is completed).
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Re-entry for more than 12 Months
27. DFRDB retirement pay recipients who re-enter for more than 12 months
must elect whether to again become contributing members of DFRDB. If a
valid election is made, the DFRDB retirement pay is cancelled and is calculated
as a new DFRDB amount of retirement pay after the further service is completed
(to take account of that additional service). If the member commuted part of the
retirement pay when it first became available, then the member must commute
part of the new retirement pay that is calculated taking account of all service
(the commutation lump sum that is paid as a result of the new commutation is
reduced by the value of the lump sum commutation amount paid originally).
28. The changes that are being made to the DFRDB Act (and to the membership
provisions of the Military Superannuation and Benefits Act 1991(MSB Act))
will ensure that DFRDB retirement pay recipients who re-enter for a further
period of service on or after 1 July 2016 become members of ADF Super. They
will continue to receive their DFRDB retirement pay while serving, irrespective
of the length of that further period of service and the Department will make
contributions to ADF Super on their behalf.
29. There are some other minor changes to facilitate administration of the
DFRDB Act by removing some red tape.
30. Item 3 inserts a definition of continuous full-time Reservist in subsection
3(1). The term has the same meaning as that term has in the ADF Super Act.
31. Item 4 changes the definition of eligible child in subsection 3(1) to increase
the age from which an eligible child must be in full-time education to be able to
benefit as the result of the death of a DFRDB member or a beneficiary under the
scheme. Benefits will be paid in respect of a child under age 18 (in lieu of age
16). A child age 18 (in lieu of age 16) and below age 25 can only benefit if the
child is receiving full-time education at a school, college or university and is not
ordinarily in employment or engaged in work on his or her own account.
32. This change removes an administrative burden for the trustee of having to
verify that children of deceased members are in full-time education from age 16.
It also removes red tape for the parent/guardian of many child beneficiaries, who
generally remain in full-time education to at least age 18, by removing the
requirement to prove this to the trustees to be able to continue to receive a
benefit.
33. Item 5 makes changes to the first part of the definition of eligible member
of the Defence Force in subsection 3(1) to close off the DFRDB scheme to
members of the Defence Force serving on continuous full-time service for
12 months or more (or further service that is continuous with previous service of
that nature) under a re-appointment or re-engagement that occurred on or after
1 July 2016.
34. A member of the Defence Force who is re-appointed or re-engaged on
continuous full-time service for a period of 12 months or more from 1 July 2016
will continue to receive their retirement pay and will be eligible to become ADF
Super members and will do so if they do not choose another scheme to which
the Department can make employer contributions.
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35. Item 6 adds a note after the definition of eligible member of the Defence
Force in subsection 3(1) that directs the reader to new section 5B which deals
with extensions of engagements of members of the Reserves whose service
spans 1 July 2016.
36. Item 7 removes the reference to section 58 in subparagraph (a)(ii) of the
definition of period of effective service in subsection 3(1). Section 58, which
provides that where a contributing member who retired and received only a
refund of contributions, a lump sum payment as a Class C invalid or a transfer
value, again becomes an eligible member, the period of past effective service is
to be disregarded unless the person elects to pay additional contributions in
respect of this period, is redundant and is being repealed.
37. The item will now include a reference to new section 5B which provides
that if the engagement of a member of the Reserves on continuous full-time
service is extended, that extended service is not a period of effective service
(because the Reservist is eligible to become a member of ADF Super and will
do so if he or she does not choose another scheme to which the Department can
make employer contributions).
38. Item 8 removes a reference to subsection 62(3) in paragraph (b) of the
definition of period of effective service, because subsection 62(3) is being
repealed as it is redundant. Subsection 62(3) ensures that a pensioner or
recipient member who rejoins the Defence Force will not be placed in a benefit-
detriment situation.
39. To this end, the subsection provides that effective service on death or
retirement of a person covered by sub-sections 62(1) or (2) (which currently
provide for the cancellation of pension, retirement and invalidity pay of
pensioners and recipient members who become eligible members) will include
any period that was a period of service for pension under the previous Defence
Forces Retirement Benefits Act 1948 (DFRB) and any period determined under
regulations made for the purpose of subsection 62(3), or notional service under
the previous Act.
40. CSC has not made any determination under the Defence Force Retirement
and Death Benefits Regulations 1973 for the purpose of section 62.
41. Item 9 replaces the definition of recipient member in subsection 3(1) as
part of the change to allow recipient members who return for a further period of
service to continue to receive their DFRDB retirement while serving. The
current definition of recipient member includes a member whose invalidity pay
is cancelled (section 61D) or whose retirement pay is suspended (section 61C)
on becoming a member of MSBS. Sections 61C and 61D are being repealed as
part of the new arrangements for DFRDB members who re-enter for a further
period of service.
42. Item 10 removes the reference to subsections 62(4) and (5) in the definition
of total period of effective service in subsection 3(1), as those subsections are
being repealed as being redundant. This is because, under the proposals,
recipient members who return for a further period of service will continue to
receive their retirement pay. This is not intended to affect invalidity pay.
Invalidity pay will still be cancelled on the basis that if a person in receipt of
invalidity pay were to undertake further service, then that person is obviously fit
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to serve. However those persons whose invalidity pay is calculated as if they
had retired on grounds other than the ground of invalidity, will continue to keep
the invalidity pay when undertaking further service.
43. Currently, section 62 provides for the cancellation of invalidity pay and
retirement pay when a recipient member returns for a further period of service of
12 months or more.
44. Subsection 62(4) effectively provides for the recovery of the commuted
portion of the invalidity or retirement pay from recipient members whose benefit
has been cancelled because of the further service. This is done by adjusting the
total period of effective service when calculating the new benefit to be paid after
the further service is completed. The reduction period is a period determined by
CSC. This subsection is not required if retirement pay and invalidity pay is not
cancelled under the new arrangements.
45. Subsection 62(5) provides for reduction in the actual period of effective
service of those recipient members who rejoin the ADF and by virtue of election
or necessity did not contribute for full benefits under the DFRB Act. This
period of effective service could be further reduced if those members had
commuted part of their benefit entitlement. It is unlikely that DFRB recipient
members will be returning for a further period of service since the DFRB
scheme was closed in 1973.
46. Item 11 has the effect of ensuring that new section 5B is not limited by
subsection 5(3), which operates to treat a member who ceases to be an eligible
member of the Defence Force and immediately again becomes such a member
as not having ceased to be an eligible member of the Defence Force.
Section 5B operates to mandatorily retire an eligible member of the Defence
Force from the day before a period of further service is extended.
47. Item 12 makes a change to section 5A which excludes certain persons from
the definition of eligible member of the Defence Force in subsection 3(1). A
recipient member who returns for a further period of service and makes an
election under section 61B (to become a DFRDB contributing member, to
become a MSBS member or not to become a MSBS member) is excluded from
the definition. Section 61B is being repealed as recipient members will no
longer need to make an election before returning for further service.
48. Item 13 inserts new section 5B that reflects the provisions of
subsection 50(3) of the Defence Act 1903 (and the equivalent subsection 32A(3)
of the Naval Defence Act 1910 and subsection 4J(3) of the Air Force Act 1923).
Those subsections provide that if a member of the Reserves gives an
undertaking to serve for a specified period and that undertaking is accepted, the
member is bound to serve for that specified period. If the Service or the
member wishes that period to be extended, the member must effectively give
another undertaking to serve for the extended period.
49. Section 5B is inserted to address the situation of a recipient member who
undertakes to serve for a specified period before 1 July 2016 and the specified
period ends after that date. If the Service or the member wishes that period of
service to be extended, then the member is taken to have retired on the day
before the day the service is extended and the member becomes eligible to be an
ADF Super member (and will become an ADF Super member if he or she does
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not choose another scheme into which the Department can make employer
contributions).
50. Subsection 5B(1) sets out the class of persons to whom the section applies -
an eligible member of the Defence Force who commenced a period of
continuous full-time service before 1 July 2016 and whose period of continuous
full-time service is extended after that date.
51. Subsection 5B(2) effectively mandatorily retires the eligible member of the
Defence Force identified in subsection 5B(1) for the purposes of the DFRDB
Act on the day before the day their service obligation is extended which is the
extension day. The subsection then specifies that a person is taken to have
begun a new period of service on the day of extension. A note sets out the effect
of the subsection - the DFRDB Act applies in relation to service before the
extension day and the ADF Super Act applies in relation to service after the
extension day.
52. Subsection 5B(3) provides that, for the purposes of DFRDB, all service
after the day of extension is to be disregarded as a period of effective service.
53. The practical effect of section 5B is that a DFRDB member who extends
their service obligation on or after 1 July 2016 will:
a. be retired for the purposes of DFRDB;
b. become a retirement pay recipient of DFRDB; and
c. become a member of ADF Super if he or she does not choose
another scheme into which the Department can make contributions.
54. Item 14 replaces subsection 23(1) because there is no further need to refer
to retirement pay having been cancelled under section 62. Recipient members
who return for a further period of service on or after 1 July 2016, or have their
period of service extended on or after that date, will become ADF Super
members and will continue to receive their DFRDB retirement pay.
55. Item 15 repeals subsection 23(5) which has the effect of ensuring that
retirement pay for a recipient member who returns for a further period of service
is not less than the retirement pay that was cancelled on returning for the further
period of service. As the retirement pay for a recipient member is not being
cancelled when the recipient member returns for a further period of service on or
after 1 July 2016 (or has a period of returned service extended after that date),
there is no need for the subsection.
56. Item 16 removes the reference to subsections 62(1) and (2) in
subsection 24(1A) as these subsections are being repealed because retirement
pay will not be cancelled when a recipient member returns for a further period
of service on or after 1 July 2016. Section 24 provides the machinery
arrangements for commuting a portion of retirement pay. In effect a member
may commute five years' retirement pay, at the rate applicable on retirement to a
lump sum. The residual annual rate of retirement pay will be obtained by
deducting from the amount of retirement pay before commutation, an amount
ascertained by dividing the commuted lump sum by the number of years of life
expectancy of the member, according to the commutation factor in Schedule 3
of the Act.
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57. Item 17 removes a reference to subsection 62(1) in paragraph 24(1B)(a)
(see explanation at item 16 above).
58. Item 18 replaces paragraphs 24(2A)(a) and (b). The reason for this is to
remove a reference to paragraph 62(4)(a) as it is being repealed (see
explanation at item 10 above).
59. Item 19 repeals subsections 24(5) to (7). These machinery provisions are
no longer required in circumstances where retirement pay is not being cancelled
when a recipient member returns for a further period of service. The fact that
retirement pay is no longer being cancelled removes the need to make
adjustments to amounts that were previously commuted.
60. Item 20 removes a reference to subsection 62(1) in subsection 30(3) as
subsection 62(1) is being repealed. The reference is being replaced with a
reference to section 62 which will now deal with the cancellation of invalidity
pay when a recipient member returns for a further period of service. It is
appropriate to cancel invalidity pay when a recipient member returns for a
further period of service on the basis that the person is obviously fit to serve.
However, those persons whose invalidity pay is calculated as if they had retired
on grounds other than the ground of invalidity, will continue to keep the
invalidity pay when undertaking further service.
61. Item 21 removes a reference to subsection 62(1) and (2) in
subsection 32A(1A), the machinery provisions that deals with the commutation
of invalidity pay that is to be paid to a person who is classified as Class C
(effectively, Class C invalidity pay is the rate of pay that would have been paid
had the person been retired on grounds other than invalidity).
62. Item 22 replaces paragraphs 32A(4)(a) and (b) for the same reasons as the
change made by item 18.
63. Item 23 replaces subsection 49Q(1) which was inserted as part of a number
of changes to enable amounts to be released from the DFRDB scheme following
changes to the taxation arrangements for the concessional contributions of very
high income earners. Subsection 49Q(1) requires retirement pay and invalidity
pay that is recalculated after a further period of service to be adjusted to reflect
any release authority lump sum payment made when the member first claimed
the retirement pay. As retirement pay is not being cancelled under the new
arrangements, there is a need to remove a reference to subsection 62(1) which is
being repealed. Subsection 62(1) is being replaced with section 62 that will
only require the cancellation of invalidity pay when a recipient member returns
for a further period of service.
64. Item 24 removes the reference to retirement pay in subsection 49Q(2)
which is no longer being cancelled when a recipient member returns for a
further period of service.
65. Item 25 repeals section 58 which is redundant. Section 58 provides that
where a contributing member who retired, and received only a refund of
contributions, a lump sum payment as a Class C invalid or a transfer value,
again becomes an eligible member, the person's period of past effective service
is to be disregarded unless the person elects to pay additional contributions in
respect of this period. There would be no person in this situation.
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66. Item 26 repeals sections 61B (which requires recipient members who intend
to resume full-time service to make an election before commencing that
service), 61C (which suspends the retirement pay of a recipient members who
become members of MSBS, either by election or the operation of the law) and
61D (which cancels the invalidity pay of recipient members who have not
served for 20 years or suspends the invalidity pay of recipient members who
have served for 20 years and who become members of MSBS, either by election
or operation of the law) as they are no longer required under the new
arrangements.
67. Item 27 effectively repeals subsection 62(1).
68. Item 28 removes the reference to retirement pay in what is effectively new
section 62. The reason for this is that, under the new arrangements, retirement
pay will no longer be cancelled when a recipient member returns for a further
period of service. Invalidity pay will continue to be cancelled when a recipient
member returns for a further period of service.
69. Item 29 ensures that invalidity pay calculated in accordance with
subsection 31(3) (that is, it is based on years of service other than retirement on
the grounds of invalidity) is not cancelled when a recipient member returns for a
further period of service.
70. Item 30 repeals subsections 62(2) to (8) as they are redundant. As
indicated, section 62 relates to both recipient members and pensioners under the
previous Acts who rejoin the Defence Force. Subsections 62(1) and (2)
provide for cancellation of retirement and invalidity pay and pensions under the
previous legislation for recipient members and pensioners who become eligible
members of the Defence Force (subsection 62(1) becomes section 62 and
provides for the cancellation of invalidity pay only, other than invalidity pay that
is calculated as if the person had been retired other than on the grounds of
invalidity).
71. Subsection 62(3) stipulates that effective service on death or retirement of a
person covered by sub-section (1) or (2) will include any period that was a
period of service for a pension under the previous Act and any period
determined under regulations made for the purpose of this clause, or notional
service under the previous Act. In effect this ensures that a pensioner or
recipient member who rejoins the Defence Force will not be placed in a benefit-
detriment situation.
72. Subsection 62(4) effectively provides for the recovery of the commuted
portion of the invalidity or retirement pay from recipient members whose benefit
has been cancelled because of the further service. This is done by adjusting the
total period of effective service when calculating the new benefit to be paid after
the further service is completed. The reduction period is a period determined by
CSC. This subsection is not required if retirement pay and invalidity pay is not
cancelled under the new arrangements.
73. Subsection 62(5) provides for reduction in the actual period of effective
service of those recipient members who rejoin the ADF and by virtue of election
or necessity did not contribute for full benefits under the DFRB Act. This
period of effective service could be further reduced if those members had
commuted part of their benefit entitlement. It is unlikely that DFRB recipient
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members will be returning for a further period of service since the DFRB
scheme was closed in 1973.
74. Subsection 62(6) applies to a deceased DFRDB member who had a lower
annual rate of pay on second retirement than the member was receiving at first
retirement. It makes provision for the retirement pay applicable at death to be
based on the higher of the annual rates of pay at first retirement.
75. Subsection 62(7) is a machinery provision which applies to members who
had previously elected to receive a deferred benefit and subsection 62(8)
provides for recovery of any retirement or invalidity pay or pension paid beyond
the point of a member's rejoining the Defence Force.
76. Item 31 ensures that sections 63 and 64 do not apply to a person who is
taken by new section 5B to have retired.
77. Section 63 allows a contributing member who retires and receives, or is
eligible to receive, a refund of contributions, to rejoin the Defence Force within
ninety days and be treated as if the person had not retired; the gap in service is
treated as a period of leave of absence without pay. Any refund of contributions
is to be repaid to the Commonwealth.
78. Section 64 applies to a contributing member who retires and receives, or is
eligible to receive, a refund of contributions, but who becomes an eligible
member again after 90 days. Provided he or she notifies CSC within 90 days
after again becoming an eligible member (or within such further period as CSC
allows) he or she may elect to purchase all or part of his or her previous
effective service by payment of an additional contribution of 5.5% of his or her
annual rate of pay applicable to him or her at the time of his or her rejoining the
Defence Force.
79. Item 32 removes the reference to sections 61C, 61D and subsection 135(2)
in section 98C which provides for the indexation of suspended pension benefits.
Sections 61C and 61D are being repealed. Subsection 135(2) is also being
repealed as it no longer has any work to do.
80. Item 33 adds a reference in subsection 102(1) to Part 5 of the Australian
Defence Force Cover Act 2015 (ADF Cover), subdivision C of which provides
for the review of decisions of CSC in relation to benefits under the scheme
established under that Act. The functions of the Defence Force Case
Assessment Panel established under Part XI of the DFRDB Act are being
expanded to facilitate the review of CSC decisions in relation to ADF Cover.
81. Item 34 changes the note to section 102, which sets out the functions of the
Defence Force Casse Assessment Panel, to refer to subsection 106(1) in lieu of
section 106.
82. Item 35 adds a second note at the end of subsection 102(1) to advise readers
that Part 5 of the Australian Defence Force Cover Act 2015 provides for the
Defence Force Case Assessment Panel to review the decisions of CSC under
that Act.
83. Item 36 amends subsection 106(1) to ensure that CSC only considers the
recommendations of the Defence Force Case Assessment Panel in relation to
decisions under the DFRDB Act. Subdivision C of Part 5 of the Australian
Defence Force Cover Act 2015 provides for CSC to consider recommendations
14
of the Panel in relation to decisions under the Australian Defence Force Cover
Act 2015.
84. Item 37 adds a note under subsection 106(1) to advise readers that Part 5 of
the Australian Defence Force Cover Act 2015 contains similar provisions for
CSC to take into account recommendations of the Defence Force Case
Assessment Panel.
85. Item 38 and Item 39 effectively repeal section 135 and substitutes the
current wording in subsection 135(1) as the proposed new section 135.
Subsection 135(1) provides that a person who transferred (or was taken to have
transferred) to MSBS when the election period was open between 1 October
1991 and 30 September 1992 was not entitled to DFRDB benefits.
Subsection 135(2) was inserted to address the situation of DFRDB recipient
members who had returned for a further period of service and had ceased to be
an eligible member of the Defence Force. Subsection 135(2) is redundant and
is repealed.
Future Fund Act 2006
86. The Future Fund was established to meet unfunded superannuation
liabilities, by accumulating assets to meet liabilities that will become payable at
a time when spending pressures associated with an ageing population are likely
to realise. The Fund strengthens the Government's balance sheet and helps
ensure the long-term sustainability of its finances
87. Item 40 inserts the Australian Defence Force Cover Act 2015 into the
definition of superannuation benefit in the Future Fund Act 2006. The scheme
established under the Australian Defence Force Cover Act 2015, to provide
death and invalidity benefits payable from Consolidated Revenue Fund, is
deemed to be an unfunded public sector superannuation scheme. As such, the
scheme will generate an unfunded liability for the Commonwealth, similar to
other Commonwealth unfunded superannuation liabilities.
Governance of Australian Government Superannuation Schemes Act 2011
88. The Governance of Australian Government Superannuation Schemes Act
2011 (GAGSS Act) governs the CSC, which will be the trustee and
administrator of ADF Super, including the ADF Super Fund, established by the
Australian Defence Force Superannuation Act 2015 and the administrator of
ADF Cover established by the Australian Defence Force Cover Act 2015.
89. Amendments need to be made to the Governance of Australian Government
Superannuation Schemes Act 2011 to bring both ADF Super, including the ADF
Super Fund, and ADF Cover within the ambit of CSC.
90. Item 41 adds reference to both the Australian Defence Force
Superannuation Act 2015 and the Australian Defence Force Cover Act 2015 in
the objects section of the GAGSS Act (subsection 3(b)). The effect of this is to
require CSC to have regard to the unique nature of military service when
performing a function under those acts.
91. Item 42 includes the Australian Defence Force Superannuation Act 2015
and the Australian Defence Force Cover Act 2015 within the definition of Act
administered by CSC in section 4.
15
92. Item 43 inserts definitions of ADF Cover, ADF Super and ADF Super
Fund in section 4.
93. Item 44 inserts reference to the ADF Super Trust Deed within the definition
of governing deed in section 4.
94. Item 45 replaces the definition of military schemes in section 4 with one
that includes reference to ADF Super and ADF Cover.
95. Item 46 inserts a reference to the ADF Super Fund in the definition of
superannuation fund administered by CSC in section 4.
96. Item 47 inserts a reference to ADF Super and ADF Cover in the definition
of superannuation scheme administered by CSC in section 4.
97. Item 48 adds reference to the Australian Defence Force Superannuation Act
2015 and the Australian Defence Force Cover Act 2015 in subsection 8(3). The
effect of this is to require CSC to have regard to the unique nature of military
service when performing a function under those acts.
98. Item 49 amends subparagraph 30(1)(c)(i) to exclude ADF Cover from the
annual report to address the performance of CSC's functions in relation to each
superannuation scheme and superannuation fund administered by it during the
year. The reason for this is that there is no superannuation fund for ADF Cover.
99. Item 50 inserts a reference to the Australian Defence Force Cover Act 2015
in subsection 30(2) which has the effect of requiring CSC to prepare an annual
report to address on its general administration of the Act.
100. Item 51 amends section 34 to ensure that when the Chair and Directors
of CSC are performing a function in relation to ADF Cover, their remuneration
is met from the Consolidated Revenue Fund, because ADF Cover does not have
a separate fund from which that remuneration can be met.
101. The item also amends section 35 to provides that, if money is payable by
CSC in respect of an action, liability, claim or demand that relates to ADF
Cover, the payment is to be made out of the Consolidated Revenue Fund
because ADF Cover does not have a separate fund.
102. Item 52 adds reference to the Australian Defence Force Superannuation
Act 2015 and the Trust Deed (within the meaning of that Act) to
subsection 35(5) which enables the regulations to modify or cease the operation
of the section as it applies to the ADF Super governing legislation. This
provision gives flexibility to allow ADF Super to operate on the same basis as
other similar superannuation schemes in relation to indemnities.
103. Item 53 adds the Australian Defence Force Cover Act 2015 to a list of
acts for which CSC may delegate its power to reconsider its own decisions or
decisions made by its delegates in relation to ADF Cover. The effect is that
reconsideration of decisions by CSC and its delegates in relation to ADF Cover
can only be undertaken by the Defence Force Case Assessment Panel
established under the DFRDB Act.
Income Tax Assessment Act 1997
104. Item 54 amends section 55-5 of the Income Tax Assessment Act 1997 to
ensure that any amount or pension paid under the Australian Defence Force
16
Superannuation Act 2015 and the Australian Defence Force Cover Act 2015 are
not exempt from income tax. This is to ensure the consistency of tax treatment
with benefits paid from other Commonwealth superannuation arrangements.
Military Rehabilitation and Compensation Act 2004
105. Compensation paid under the Military Rehabilitation and Compensation
Act 2004 to members or former members of the ADF is offset against military
superannuation invalidity benefits. Changes are required to the Military
Rehabilitation and Compensation Act 2004 to allow compensation paid under
that Act to be offset against payments made under ADF Cover.
106. Item 55 includes ADF Cover within the definition of Commonwealth
superannuation scheme under subsection 5(1).
107. Item 56 includes ADF Cover within the definition of Commonwealth
superannuation scheme under subsection 5(1).
Military Superannuation and Benefits Act 1991
108. As part of the introduction of ADF Super, the current MSBS will be
closed to new members from 1 July 2016. The following clauses contain
amendments to effect the closing of MSBS.
109. The following clauses also contain amendments to reduce red tape and
increase cross-agency communication for the administration of MSBS.
110. Item 57 inserts a definition of member into subsection 3(1) to refer to
new sections 6 and 7.
111. Item 58 repeals section 6 which sets out the membership for MSBS and
replaces the sections with two new sections. New section 6 provides that a
member of the Permanent Forces and a member of the Reserves who is
rendering continuous full-time service under an undertaking that has been
accepted is a member of MSBS subject to exclusions set out in new section 7.
112. New section 7 provides that eligible members of the Defence Force for
the purposes of the DFRDB Act (effectively, contributing DFRDB members)
are not MSBS members. It also provides that persons who become members of
the Permanent Forces or members of the Reserves who commence a period of
continuous full-time service on or after 1 July 2016 are not members if they do
not have a preserved MSBS employer benefit.
113. MSBS members who elect to become ADF Super members are not
MSBS members. If a MSBS member chooses to join ADF Super, they will not
be able to contribute to MSBS. This choice will affect any future period of ADF
service. MSBS members who choose to join ADF Super will not be able to
choose to rejoin MSBS as a contributing member at a later time.
114. Item 59 inserts a provision that enables CSC to presume that information
provided to CSC by the Department is correct for the purposes of the MSBS
Trust Deed. A tribunal, authority or person empowered to review a decision of
CSC is not bound by any such presumption made by CSC.
115. This clause is designed to reduce administrative burden and red tape. It
ensures that CSC is not required to verify information provided to it by the
17
Department. The clause is not intended to prevent CSC from verifying any
information provided to it should it so wish.
116. Item 60 expands the people to whom the Minister may delegate his
powers under the Act or regulations to an employee of the administrator, CSC.
This is consistent with the Minister being able to delegate all or any of his
powers to the CEO of ComSuper or a member of the staff of ComSuper.
Superannuation Act 2005
117. Item 61 inserts new subsection 5(1A) into the Superannuation Act 2005.
Section 5 sets out who is a public sector employee for the purposes of
determining eligibility for membership of the Public Sector Superannuation
Accumulation Plan under section 13 of the Act. The new subsection 5(1A) is
inserted to make it clear that a member of the Defence Force is not a public
sector employee for the purposes of the Act just because the person is being paid
by the Commonwealth as a member of the Defence Force.
Superannuation Industry (Supervision) Act 1993
118. Insurance is a key element of the benefits provided to members of a
superannuation fund. These benefits protect members against the risk of not
being able to accumulate sufficient retirement savings, for themselves or their
dependents, due to having to cease work as a result of injury or illness or as a
result of death.
119. For this reason, trustees are required to provide minimum levels of
default life insurance and total and permanent disability insurance to members
of their fund that hold the MySuper product on an opt-out basis. Trustees that
cannot obtain opt-out insurance at a reasonable cost must provide MySuper
members with compulsory insurance.
120. A military specific statutory death and invalidity scheme, provided by
the Commonwealth, ADF Cover, is being established. From 1 July 2016, ADF
Super members will be covered under this statutory scheme as will members
who could have been ADF Super members but for choosing another fund into
which Defence's employer contributions are to be paid.
121. Section 68AA of Superannuation Industry (Supervision) Act 1993 (SIS
Act) sets out the requirement for trustees to provide death and invalidity cover
under a policy obtained through an insurer. Failure to do so is a breach of the
trustees licence.
122. Item 62 inserts a provision that exempts ADF Super from the
requirement to provide death and invalidity insurance under a policy provided
by an insurer. It does this on the basis that all members of ADF Super (within
the meaning of the Australian Defence Force Superannuation Act 2015) will be
provided with death and invalidity insurance under the statutory ADF Cover
scheme at no cost to members of the ADF.
123. This clause also exempts trustees of other schemes regulated under the
superannuation regulatory regime from the requirement to provide death and
invalidity insurance to members of the ADF who would have been members of
ADF Super, except that they exercised choice and chose another fund into which
the Department's contributions are paid.
18
Superannuation (Resolution of Complaints) Act 1993
124. The Superannuation (Resolution of Complaints) Act 1994 establishes the
Superannuation Complaints Tribunal (SCT) for the external resolution of
complaints made by, among others, members and beneficiaries of
superannuation funds and persons affected by insurers' decisions about death
and invalidity benefits. It is proposed that the SCT be given the power to
provide external review of decisions of CSC in relation to benefits provided
under ADF Cover (it will already have the power to review decisions of CSC in
relation to ADF Super).
125. Item 63 inserts a new section 4C to provide for the external review of
decisions in relation to benefits payable to those covered under the Australian
Defence Force Cover Act 2015.
PART 2 - APPLICATION PROVISIONS
126. Item 64 makes new section 52A, which sets the employer contribution
rate at 16.4% for ADF Super members and those who would have been ADF
Super members but for choosing another fund to which the Department is to
contribute (see item 2 above), applicable from 1 July 2016.
127. Item 65 makes new section 52B which allows the Department to pass on
information to facilitate invalidity classification for DFRDB and MSBS
members (see item 2 above), applicable immediately.
128. Item 66 has the effect of preserving the present arrangements for
DFRDB recipient members who return for a further period of service prior to
1 July 2016 where that service ends on or after 1 July 2016 (that is, the
requirement to make an election before commencing service, the suspension or
cancellation of retirement pay as the case may be, the requirement to commute
recalculated retirement pay after the completion of further service, etc.).
19
SCHEDULE 2 - FLEXIBLE SERVICE ARRANGEMENTS IN
THE PERMANENT FORCES
129. At present, Defence legislation provides for two types of service for
members of the ADF - permanent and reserve service. All members of the
permanent force serve on a continuous full-time basis. Reserve members are not
bound to render continuous full-time service, other than when they voluntarily
undertake to render continuous full-time service for a specified period of time
and that undertaking is accepted.
130. These conditions of service are set out in the Defence Act 1903, the Naval
Defence Act 1910 and the Air Force Act 1923.
131. Under current arrangements, which are limited by the provisions of the
current DFRDB and MSBS superannuation arrangements, members of the
permanent force who wish to work other than full-time are required to take part-
time leave without pay. The period of part-time leave without pay cannot
exceed 21 days for any particular period without having adverse superannuation
consequences by creating a break in service. This constrains the flexibility
available to permanent ADF members and the Chiefs of Service who are
responsible for providing capability.
132. The following amendments to the Defence Act 1903, the Naval Defence
Act 1910 and the Air Force Act 1923 introduce a new contemporary concept of
Defence service, effectively, formalising the present arrangements, removing the
need for any member of the permanent force to take part-time leave without pay
if they wish to render flexible service. It is not necessary to provide similar
arrangements for members of the Reserves who already have access to flexible
service through the use of Reserve service days (in lieu of undertaking
continuous full-time service).
133. This category of service will provide greater flexibility for permanent ADF
members in line with contemporary community standards of employment. It
will also give the Chiefs of Service greater flexibility in dealing with capability.
134. The new flexible service arrangements, will work in conjunction with the
introduction of ADF Super to provide flexible, modern and equitable conditions
of service for ADF members to assist in the delivery of Defence capability.
Air Force Act 1923
135. Item 1 inserts new section 4H after section 4G to provide for flexible
service arrangements for members of the Permanent Air Force.
136. Subsection 4H(1) provides that the Chief of Air Force may determine a
class of persons who may render flexible service instead of continuous full-time
service. The determination does not mean that everyone in that class is required
to participate in flexible service arrangements. In that determination, the Chief
may determine a period or pattern of service that constitutes the flexible service.
137. A note to the subsection advises the reader that a person who is in a class
of persons determined by the Chief does not have to participate in flexible
service arrangements (that is, the person does not have to apply).
138. Subsection 4H(2) provides that any person who is a member of the
Permanent Air Force may apply to the Chief of Air Force in writing to render
20
flexible service, even if the person is not in the class of person's identified in the
Chief's determination. A person who is in a class of persons approved for
flexible service, must also apply to render flexible service.
139. Subsection 4H(3) sets out that the Chief may determine that a member
who has applied may render flexible service and may determine the period or
pattern of service that constitutes that flexible service and the period during
which the determination is in force. A note to the subsection reminds the reader
that a determination may be varied or revoked.
140. Subsection 4H(4) provides that even if a person is in a class of persons
identified as able to undertake flexible service, the Chief may still:
a. refuse an individual's application for flexible service; or
b. determine a different period or pattern of flexible service to that set
out in the determination made under subsection 4H(1).
141. A determination under subsections 4H(3) and 4H(4) is a decision under
an enactment and would be subject to external merits review under the
provisions of the Administrative Decisions (Judicial Review) Act 1977.
142. Subsection 4H(5) provides that a person rendering flexible service in
accordance with a determination made under subsection 4H(3) is taken to be
rendering continuous full time air-force service for the garnishee provisions of
the Defence Act 1903 (section 120B), for all the purposes of the Defence Force
Discipline Act 1982, the DFRDB Act, the MSB Act, for Ministerial
determinations of non-salary related allowances for members of the ADF
(section 58B of the Defence Act 1903), for determinations of the Defence Force
Remuneration Tribunal of salary related allowances for members of the ADF
(section 58H of the Defence Act 1903) for any instruments made for the purpose
of the Defence Act 1903, the Defence Force Discipline Act 1982, the DFRDB
Act and the MSB Act or any other Act, instrument or provision prescribed by
regulation.
143. Subsection 4H(6) provides that, without limiting subsections 4H(1)
and 4H(3), a flexible service determination may deal with:
a. the treatment of flexible service, including how remuneration and
allowances are to be treated, for a person or persons in a class; and
b. whether the person or persons rendering flexible service under a
determination are fulfilling their obligation to render continuous full
time air-force service under section 4G.
144. Subsection 4H(7) provides that, at any time, the Chief may revoke or
vary a flexible service determination made under subsections 4H(1) and 4H(3).
Permanent members undertaking flexible service have the same service
obligation as members of the permanent force not undertaking flexible service.
This provision ensures that the Chief is able to require persons undertaking
flexible service to meet their service obligation so that, at any time, the member
can be required to render continuous full time service.
145. Subsection 4H(8) sets out conditions on which a flexible service
determination made under subsection 4H(3) is automatically revoked.
21
146. Subsection 4H(9) provides that the Chief of the Defence Force may, at
any time, direct the Chief to revoke a determination under subsection 4H(3).
The Chief of the Defence Force may use this power if he or she is satisfied that
it is appropriate to do so for operational or other requirements of the Defence
Force.
147. The purpose of subsection 4H(9) is to provide the Chief of the Defence
Force the power to manage overall Defence capability through directing the
Service Chiefs.
148. Subsection 4H(10) provides that, to avoid doubt, the Chief must comply
with the direction of the Chief of the Defence Force under subsection 4H(9).
149. Subsection 4H(11) provides that a determination or direction made
under section 4H is not a legislative instrument within the meaning of section 5
of the Legislative Instruments Act 2003. The purpose of the determination
making power is to create a class of persons who can access flexible service
arrangements at a particular time in their career in the permanent force. It is an
instrument that relates to the terms and conditions of those members'
engagement with the ADF. As such, a determination for these purposes is an
internal employment related matter for the ADF and is consistent with the
exemption provided in the Legislative Instruments Regulations 2004.
150. Item 2 inserts subsection 8A(1AA) which ensures that the power to
make flexible service determinations under section 4H may not be delegated to
an officer of the Permanent Air Force below the rank of Air Commodore.
Defence Act 1903
151. Item 3 inserts new section 46 to provide for flexible service
arrangements for members of the Regular Army.
152. Subsection 46(1) provides that the Chief of Army may determine a class
of persons who may render flexible service instead of continuous full-time
service. The determination does not mean that everyone in that class is required
to participate in flexible service arrangements. In that determination, the Chief
may determine a period or pattern of service that constitutes the flexible service.
153. A note to the subsection advises the reader that a person who is in a class
of persons determined by the Chief does not have to participate in flexible
service arrangements (that is, the person does not have to apply).
154. Subsection 46(2) provides that any person who is a member of the
Regular Army may apply to the Chief in writing to render flexible service, even
if the person is not in a class of persons identified in the Chief's determination.
A person who is in a class of persons approved for flexible service, must also
apply to render flexible service.
155. Subsection 46(3) sets out that the Chief may determine that a member
who has applied may render flexible service and may determine the period or
pattern of service that constitutes that flexible service and the period during
which the determination is in force. A note to the subsection reminds the reader
that a determination may be varied or revoked.
156. Subsection 46(4) provides that even if a person is in a class of persons
identified as able to undertake flexible service, the Chief may still:
22
a. refuse an individual person's application for flexible service; or
b. determine a different period or pattern of flexible service to that set
out in the determination made under subsection 46(1).
157. A determination under subsections 46(3) and 46(4) is a decision under
an enactment and would be subject to external merits review under the
provisions of the Administrative Decisions (Judicial Review) Act 1977.
158. Subsection 46(5) provides that a person rendering flexible service in
accordance with a determination made under subsection 46(3) is taken to be
rendering continuous full time Army service for the garnishee provisions of the
Defence Act 1903 (section 120B), for all the purposes of the Defence Force
Discipline Act 1982, the DFRDB Act, the MSB Act, for Ministerial
determinations of non-salary related allowances for members of the ADF
(section 58B of the Defence Act 1903), for determinations of the Defence Force
Remuneration Tribunal of salary related allowances for members of the ADF
(section 58H of the Defence Act 1903) for any instruments made for the purpose
of the Defence Act 1903, the Defence Force Discipline Act 1982, the DFRDB
Act and the MSB Act or any other Act, instrument or provision prescribed by
regulation.
159. Subsection 46(6) provides that, without limiting subsections 46(1) and
46(3), a flexible service determination may deal with:
a. the treatment of flexible service, including how remuneration and
allowances are to be treated, for a person or persons in a class; and
b. whether the person or persons rendering flexible service under a
determination are fulfilling their obligation to render continuous full
time Army service under section 45.
160. Subsection 46(7) provides that, at any time, the Chief may revoke or
vary a flexible service determination made under subsections 46(1) and 46(3).
Permanent members undertaking flexible service have the same service
obligation as members of the permanent force not undertaking flexible service.
This provision ensures that the Chief is able to require persons undertaking
flexible service to meet their service obligation so that, at any time, the member
can be required to render continuous full time service.
161. Subsection 46(8) sets out conditions on which a flexible service
determination made under subsection 46(3) is automatically revoked.
162. Subsection 46(9) provides that the Chief of the Defence Force may, at
any time, direct the Chief of Army to revoke a determination under
subsection 46(3). The Chief of the Defence Force may use this power if he or
she is satisfied that it is appropriate to do so for operational or other
requirements of the Defence Force.
163. The purpose of subsection 46(9) is to provide the Chief of the Defence
Force the power to manage overall Defence capability through directing the
Service Chiefs.
164. Subsection 46(10) provides that, to avoid doubt, the Chief of Army must
comply with the direction of the Chief of the Defence Force under
subsection 46(9).
23
165. Subsection 46(11) provides that a determination or direction made under
section 46 is not a legislative instrument within the meaning of section 5 of the
Legislative Instruments Act 2003. The purpose of the determination making
power is to create a class of persons who can access flexible service
arrangements at a particular time in their career in the permanent force. It is an
instrument that relates to the terms and conditions of those members'
engagement with the ADF. As such a determination for these purposes is an
internal employment related matter for the ADF and is consistent with the
exemption provided in the Legislative Instruments Regulations 2004.
166. Item 4 amends subsection 120A(4AA) of the Defence Act 1903 to
ensure that the power to make flexible service determinations under section 46
may not be delegated to an officer of the Regular Army below the rank of
Brigadier.
Defence Force Retirement and Death Benefits Act 1973
167. Item 5 inserts subsection 19(3) to make it clear that the contributions of
a DFRDB contributing member who is rendering flexible service are to be based
on the rate of pay applicable to the member as if the member was not rendering
flexible service (that is, the contributions will be 5.5% of the annual rate of
salary at the highest increment for rank held within a pay grade applicable to the
member and any service allowance being paid).
Naval Defence Act 1910
168. Item 6 inserts new section 32 to provide for flexible service
arrangements for members of the Permanent Navy.
169. Subsection 32(1) provides that the Chief of Navy may determine a class
of persons who may render flexible service instead of continuous full-time
service. The determination does not mean that everyone in that class is required
to participate in flexible service arrangements. In that determination, the Chief
may determine a period or pattern of service that constitutes the flexible service.
170. A note to the subsection advises the reader that a person who is in a class
of persons determined by the Chief does not have to participate in flexible
service arrangements (that is, the person does not have to apply).
171. Subsection 32(2) provides that any person who is a member of the
Permanent Navy may apply to the Chief in writing to render flexible service,
even if the person is not in a class of persons identified in the Chief's
determination. A person who is in a class of persons approved for flexible
service, must also apply to render flexible service.
172. Subsection 32(3) sets out that the Chief may determine that a member
who has applied may render flexible service and may determine the period or
pattern of service that constitutes that flexible service and the period during
which the determination is in force. A note to the subsection reminds the reader
that a determination may be varied or revoked.
173. Subsection 32(4) provides that even if a person is in a class of persons
identified as able to undertake flexible service, the Chief of Navy may still:
a. refuse an individual person's application for flexible service; or
24
b. determine a different period or pattern of flexible service to that set
out in the determination made under subsection 32(1).
174. A determination under subsections 32(3) and 32(4) is a decision under
an enactment and would be subject to external merits review under the
provisions of the Administrative Decisions (Judicial Review) Act 1977.
175. Subsection 32(5) provides that a person rendering flexible service in
accordance with a determination made under subsection 32(3) is taken to be
rendering continuous full time Naval service for the garnishee provisions of the
Defence Act 1903 (section 120B), for all the purposes of the Defence Force
Discipline Act 1982, the DFRDB Act, the MSB Act, for Ministerial
determinations of non-salary related allowances for members of the ADF
(section 58B of the Defence Act 1903), for determinations of the Defence Force
Remuneration Tribunal of salary related allowances for members of the ADF
(section 58H of the Defence Act 1903) for any instruments made for the purpose
of the Defence Act 1903, the Defence Force Discipline Act 1982, the DFRDB
Act and the MSB Act or any other Act, instrument or provision prescribed by
regulation.
176. Subsection 32(6) provides that, without limiting subsections 32(1) and
32(3), a flexible service determination may deal with:
a. the treatment of flexible service, including how remuneration and
allowances are to be treated, for a person or persons in a class; and
b. whether the person or persons rendering flexible service under a
determination are fulfilling their obligation to render continuous full
time Naval service under section 31.
177. Subsection 32(7) provides that, at any time, the Chief may revoke a
flexible service determination made under subsections 32(1) and 32(3).
Persons undertaking flexible service still have the same service obligation as
members of the permanent force not undertaking flexible service. This
provision ensures that the Chief is able to require persons undertaking flexible
service to meet their service obligation so that, at any time, the member can be
required to render continuous full time service.
178. Subsection 32(8) sets out conditions on which a flexible service
determination made under subsection 32(3) is automatically revoked.
179. Subsection 32(9) provides that the Chief of the Defence Force may, at
any time, direct the Chief of Navy to revoke a determination under
subsection 32(3). The Chief of the Defence Force may use this power if he or
she is satisfied that it is appropriate to do so for operational or other
requirements of the Defence Force.
180. The purpose of subsection 32(9) is to provide the Chief of the Defence
Force the power to manage overall Defence capability through directing the
Service Chiefs.
181. Subsection 32(10) provides that, to avoid doubt, the Chief of Navy must
comply with the direction of the Chief of the Defence Force under
subsection 32(9).
25
182. Subsection 32(11) provides that a determination or direction made under
section 32 is not a legislative instrument within the meaning of section 5 of the
Legislative Instruments Act 2003. The purpose of the determination making
power is to create a class of persons who can access the flexible service
arrangement at a particular time in their career in the permanent force. It is an
instrument that relates to the terms and conditions of those members'
engagement with the ADF. As such a determination for these purposes is an
internal employment related matter for the ADF and is consistent with the
exemption provided in the Legislative Instruments Regulations 2004.
183. Item 7 inserts subsection 44B(3AA) to ensure that the power to make
flexible service determinations under section 32 may not be delegated to an
officer of the Permanent Navy below the rank of Commodore.
26
SCHEDULE 3 - AMENDMENTS CONTINGENT ON THE
ACTS AND INSTRUMENTS (FRAMEWORK REFORM) ACT
2015
184. The following items make amendments to the Australian Defence Force
Superannuation Act 2015 to reflect changes that will come into operations when
the Acts and Instruments (Framework Reform) Act 2015 comes into operation.
All of the amendments are administrative in nature and do not change the
substantive purpose of the primary provision.
185. Items 1 through 4 change references to the Legislative Instruments Act
2003 wherever occurring in the Australian Defence Force Superannuation Act
2015 to references to the Legislation Act 2003.
27
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act
2011
Defence Legislation Amendment (Superannuation and ADF Cover) Bill
2015
This Bill is compatible with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011.
Overview of the Bill
The Australian Defence Legislation Amendment (Superannuation and ADF
Cover) Bill 2015 (Consequentials Bill) is part of a package of three Bills to
establish the Australian Defence Force Superannuation Scheme (ADF Super)
and facilitate the introduction of the Australian Defence Force's future
workforce model by providing flexible service conditions for permanent
members of the Australian Defence Force (ADF)
Human Rights Implications
The Bill promotes the following rights:
Article 7, International Covenant on Economic, Social and Cultural
Rights (ICESCR), the right to just and favourable conditions of work;
Article 9, ICESCR, the right to social security;
Article 11, ICESCR, the right to an adequate standard of living;
Article 2(2), ICESCR, the right to equality and non-discrimination.
Article 26, International Covenant on Civil and Political Rights; and
(ICCPR), the right to equality and non-discrimination.
This Bill proposes to introduce new and modern superannuation arrangements
which provide just and favourable conditions of work for ADF members. The
employer contributions will exceed the minimum requirement under the
Superannuation Guarantee (Administration) Act 1992 and there is no
compulsion for the ADF member to make additional contributions. However,
they can elect to do so to improve their circumstances. This will provide an
enhanced standard of living and social security environment.
The Bill also proposes to provide a military specific statutory death and
invalidity scheme and all ADF Superannuation members will have access to this
insurance without any employee contributions. These premiums will be
contributed from a specific Government consolidated appropriation. These
measures promote the right to social security and an enhanced living standard.
The Bill further proposes to introduce flexible service arrangements which
provide just and favourable conditions of work for ADF members. The flexible
service arrangements will allow ADF members to better balance their military
careers and their personal lives. Members on flexible service arrangements will
have consistent comparative benefits to other ADF members, including access to
death and invalidity and superannuation benefits. This promotes the right to
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equality and non-discrimination. The introduction of flexible service
arrangements in legislation is consistent with the Review into the Treatment of
Women in the Australian Defence Force conducted by Elizabeth Broderick, in
her role as the Sex Discrimination Commissioner. This measure promotes the
right to equality and non-discrimination.
The Bill may infringe the following human right:
Articles 17, ICCPR, the right to privacy.
Article 17 of the ICCPR prohibits State Parties from arbitrary or unlawful
interference with privacy.
The Bill provides that the Department give the Commonwealth Superannuation
Corporation (CSC) information on individual ADF members where that
information is relevant to the determining of a benefit for that member.
Although this may appear to impact the right to privacy, the transfer of an ADF
member's information between Commonwealth entities is not arbitrary or
unlawful.
The information is transferred only to ensure expediency in the calculation of a
benefit and is limited to only information that is relevant to that calculation. This
limitation is reinforced by the requirement in the Bill that CSC only use personal
information for the purposes of administering the military superannuation
schemes. CSC is responsible for the privacy, confidentiality and security of
personal information it holds in accordance with the Privacy Act 1988 and the
Australian Privacy Principles under that Act. Accordingly, the Bill does not
impact the right to privacy.
Conclusion:
The Australian Defence Legislation Amendment (Superannuation and ADF
Cover) Bill 2015 is compatible with human rights. It advances the protection of
human rights.