Unrest in the Ranks

26 Oct 2011

“The willingness of future generations to serve in our military will be directly dependent upon how we have treated those who have served in the past.” George Washington

You may not have noticed yet, but you will – the troops (current and retired) are angry; they are very angry, and they are demanding a Fair Go (www.adso.org.au). To help focus their anger the various single service welfare associations have recently coalesced into a single entity, the Alliance of Defence Service Organisations (ADSO) to address significant injustices knowingly being perpetrated by this and previous governments on those who serve our Nation.

The crux of their complaint is that those who have retired and living on their military retirement pension(that they compulsorily contributed 5.5% of their gross pay to consolidated revenue, taken from their net pay after tax, making it 8%) cannot now sustain their living standard.

The nub of the issue is that those who volunteered to serve in the ADF were promised a “fully indexed retirement pension” as part of their employment “package”. This guarantee occurred in 1977 following the introduction of the Defence Force Retirement and Death Benefits Act (1973). Before 1977, the DFRDB and DFRB Schemes obtained increases retrospectively through ad hoc legislation introduced at the whim of the government. The automatic safeguarding of their retirement pension through the Consumer Price Index (CPI) initiative, which in the seventies and early eighties correctly captured cost of living increases, meant military pensions automatically retained value. This indexation followed a similar arrangement granted to Commonwealth Public Servants a year earlier. Not surprisingly, the politicians adopted a similar arrangement for their superannuation scheme.

The wage accords of the late eighties and early nineties saw significant changes in the basket of goods priced to capture the CPI. The old CPI morphed into a measurement of inflation rather than an index that measured real cost of living. Age pensioners (and retired politicians) saw their purchasing power diminish, and in 1997, new indexation arrangements were progressively adopted for politicians and Age Pensioners to more equitably retain purchasing power. The troops were abandoned –deliberately ignored by Government without recourse.

The consequence of this employer neglect on veterans is palpable. Over the last decade, Age Pensions have gone up 95%, politicians retirement allowance up 91%, whilst retired service personnel payments have only increased 33%.

All sides of politics know this exploitation is unjust. Late last year the Opposition, to their credit and 2010 election pledge, introduced a Private Members Bill into the Senate to address some of the inadequacies in military DFRDB indexation. Labor, The Greens and Senator Xenophon voted the bill down by one vote. Yet, on 14 September 2009, four Labor politicians, in government, wrote to the then Hon Lindsay Tanner, Minister for Finance and Deregulation, and inter alia pleaded: “There would therefore appear to be no reason why the Government could not announce that the development of the PBLCI (Pensioner and Beneficiaries Living Cost Index) since the Matthews Review has opened the way for Australian Government civilian and defence force pensions now to be indexed – as for age and other pensions,” signed Mike Kelly, Member for Eden Monaro; Bob McMullan, Member for Fraser, Kate Lundy, Senator for the ACT and Annette Ellis, Member for Canberra.

Service personnel joining the ADF after 1991 are no better off. Their new Military Superannuation Benefit Scheme (MSBS) is equally flawed by the iniquitous CPI. Employer contributions are retained by the Commonwealth until their Preservation Age. Farcically, the “Military Super Book” (current edition) states: “Pensions are subject to full CPI updating every six months (ensuring that $1 in 2011 will be equivalent to $1 in 2028).” The Government knows that is deliberately misleading, the veteran community certainly know it (from experience) and there is growing awareness of the lie among those still serving.

An even starker injustice is the governments discriminatory treatment of a spouse following the death of a military member (retired or serving). The military spouse receives 62.5% (5/8th), the public servants spouse 67% and the politicians spouse 83.3% (5/6th) of their respective partners entitlements. Why the disparity?

Little wonder there is growing disillusionment in the ranks.

Peter Criss AM AFC
Air Vice-Marshal Retd