Senator GALLACHER (South Australia) (17:28): I rise to make a contribution in this matter of public importance debate on military superannuation pensions. In the very short time that I have been a senator for South Australia I have had the experience of mixing it with service personnel in a number of different areas, including in a very short stint—in comparison to our serving personnel—in Afghanistan. I have also had representations made directly to my office from the service associations. I have to say there has not been a large number of representations—three, in fact—and in all the exposure I gained in Afghanistan, where I sought out every opportunity to talk to serving men and women, not one raised the matter of the service pensions. I would point out that I have an interest in this matter. I have a niece who is a serving member of the Australian defence forces and has served in Afghanistan; I have a prospective son-in-law who is a veteran of Iraq and Afghanistan; I have a brother who is a returned soldier, a veteran of the Vietnam conflict—the list goes on and on, if you like. So I have listened very carefully to the debate here today, I have listened very carefully to the constituents who have approached me and I have sought out the views of many members of the armed forces. And it appears to me that this debate today is an extremely politicised one that is not succinctly and clearly addressing what the facts actually are. The contribution from former Senator Minchin was extremely illuminating when he said: There is no inherent logic to the proposition that a public sector employment-related superannuation payment should be indexed in exactly the same fashion as a means-tested welfare benefit, in this case the age pension. He also said: This … claim was properly rejected by the Howard government, of which I was a member … So someone had the courage of their convictions, both in political life and in the aftermath, to succinctly and clearly put their position on the public record. It is very clear to me in relation to members of our defence forces, no matter what conflict they have served in. My next-door neighbour is a veteran of the 2/48 Battalion and at 92 years old, living independently, is a shining example of the contribution our servicemen have made to the community. He has never raised the indexation of benefits with me. Senator Ronaldson: So you don't think it is an issue? Senator GALLACHER: My point is that we are appropriately looking after members of the defence community. The special needs of military service are met more generously than is the case with the average Commonwealth civilian schemes—and rightly so. The risks for those who serve in the military are very clear and self-evident, but these Commonwealth superannuation pensions provide a guaranteed source of income that, very importantly, is not subject to market fluctuations. If we look at what has happened to people in superannuation in the private sector, they have been subject to the GFC and they are subject to market fluctuations. Very importantly, these schemes we are talking about are not. A military superannuation pension is not necessarily a measure of the person's complete financial situation. Many complete 20 years of glorious service and retire prior to retirement age. They go on to have another career, easily supplemented by a pension. I have worked with and I have represented members of the Air Force who have then been engaged in the service industry, in particular at Armaguard or any of those industries, where they very clearly supplemented a Defence Force pension with another career and they got another nine per cent in superannuation, which is perhaps now going up to 12 per cent. The reality is the pension is not designed simply to be indexed in the same way as the age pension. The availability of the service pension also recognises those people who have served in a theatre of war, in a conflict zone or a highly dangerous situation. Quite properly, as Senator Feeney outlined earlier, the current notional employer contribution rate for the DFRDB is 33.3 per cent. That is a contribution significantly—more than three times—higher than the nine per cent of the superannuation guarantee. So people are not in invidious terms here. I understand that they have a widely held and deeply felt grievance. Senator Ronaldson: I don't think you do! Senator GALLACHER: I do understand that, Senator Ronaldson. Access to the retirement income, as I have said, could conceivably have been achieved by these people at the age of 40 and they could have then gone on to have another career. Another really important thing that happens in this particular set of pension arrangements is that 99.5 per cent of people have commuted to a lump sum. I am not foolish enough to believe that that is not a win-win for both the provider of the pension and the recipient, though it is probably a job for an actuary to work out whether giving a lump sum or paying someone over the whole of their life is the cheaper benefit. But 99.5 per cent have chosen to take a lump sum, up-front, and therein lies the figure which has been put out here today of $24,000-odd for the pension. It is not subject to market fluctuations, is to be paid for all their life and to pass on to their next of kin. So if people are going to come in here and get high and mighty and righteous about it, we really have to talk about the correct situation, as it exists. To put it quite simply: the proposition that a military superannuant who has retired at age 55, having received a lump sum payment of $200,000 or $300,000 or $400,000 or higher, and has an annual non-means-tested superannuation payment of $40,000 or $50,000 or $60,000, should have that annual superannuation payment indexed in the same way as an age pension is not something that I am supporting. Clearly, we need to treat an apple as an apple. If we were able to digest all of the information that we get in this place on any given day, one of the really important pieces of information that has come across all of our desks this week was from the Actuaries Institute. It was entitled 'Australia's longevity tsunami'. Its opening paragraph in the executive summary sets up some of the problems that any government is going to face in this area. It said: Australia is experiencing a major demographic and societal transformation. By 2050, almost a quarter of the population will be aged over 65 compared to 14 per cent now. Australians are already one of the longest lived populations on the planet, and our longevity is steadily improving. Australian life expectancies are rising much faster than commonly understood and this has serious social policy implications—especially in economic, retirement incomes, health and welfare policy. Anything that is done in this area will be tested against the ability of another group in our community to run and win the argument. All governments should recognise that we may face an electoral tsunami if we put the wrong foot forward in this space. The baby boomers will vote and they will probably get a result that they enjoy, but the fiscal responsibility argument will not go away.