EXPLANATORY STATEMENT

STATUTORY RULES 1989 NO 77

ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE

SUPERANNUATION ACT 1976

SUPERANNUATION (SALARY) REGULATIONS (AMENDMENT)

The Superannuation Act 1976 (the Act) makes provision for and in relation to an occupational superannuation scheme for persons employed by the Commonwealth, and for certain other persons.

Section 168 of the Act provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing matters which the Act requires or permits to be prescribed, or which are necessary or convenient to be prescribed, for carrying out or giving effect to the Act.

Under the Act, the rate of fortnightly contributions payable by an eligible employee (contributor) is expressed as a percentage of the fortnightly rate of his or her salary. In accordance with subsection 3(1) of the Act, “fortnightly rate of salary” in relation to a contributor means an amount equal to one-twenty-sixth of the amount of his or her annual rate of salary.

The rates of employer-financed invalidity, age and early retirement pensions payable under the Act are expressed as percentages of the former contributor’s final annual rate of salary. In accordance with subsection 3(1) of the Act, “final annual rate of salary” means, in the generality of cases, the person’s annual rate of salary on his or her last day of service.

Subsection 5(1) of the Act provides that “salary” means salary or wages and:

(a)        includes any allowance, or the value of any allowance, or any fee, that is an allowance or fee of a kind that, under the regulations, is to be treated as salary for the purposes of the Act; but

(b)        does not include any part of any salary or wages that, under the regulations, is not to be treated as salary for the purposes of the Act.

Regulations for the purposes of section 5 are contained in the Superannuation (Salary) Regulations (the Principal Regulations).

Part II of the Principal Regulations (regulations 4 to 8) sets out the allowances that are to be treated as salary for the purposes of the Act and the conditions under which certain of those allowances are to be treated as salary. Regulation 5 lists allowances that are to be treated as

salary and includes in paragraph 5(1) an allowance of a prescribed kind that is payable on a regular basis to a contributor. The question of whether an allowance is payable on a regular basis and other matters relating to allowances of a prescribed kind are dealt with in regulations 6, 7 and 8.

Allowances that are allowances of a prescribed kind for the purposes of Part II are listed in regulation 4. Paragraph 4(e) of the Principal Regulations specifies as an allowance of a prescribed kind “an allowance that is payable to an eligible employee in lieu of payments for overtime or other extra duty work”. This includes certain allowances payable to members of the staff of Ministers and certain office-holders of the Parliament and to officers and employees in the Australian Public Service performing duties as departmental liaison officers in the office of a Minister. It is intended that, notwithstanding that such an allowance might be payable to a contributor on a regular basis in the terms of regulation 6 and thus qualify to be treated as part of the person’s salary for the purposes of the Act, the person have the option of not having it so treated.

The amending regulations 2 and 4 amend regulation 5 of the Principal Regulations and introduce a new Part IID to give effect to those intentions. The amendments are outlined in the attachment.

The intention behind subregulation 7(2) of the Principal Regulations is that, where an allowance of a prescribed kind is received on a regular basis but at varying rates, it is to be treated as salary for the purposes of the Act only to the extent of the lowest rate at which it was received during the previous 12 months. This intention is not entirely clear from the subregulation as presently drafted and the opportunity has been taken to amend the subregulation to clarify this intention. The relevant amendment is contained in regulation 3 of the amending Regulations.

The amending Regulations operate from the date of their gazettal.

ATTACHMENT

SUPERANNUATION (SALARY) REGULATIONS (AMENDMENT) SUMMARY OF PROVISIONS

The amending Regulations clarify the intention of subregulation 7(2) and insert a new Part IID which relates to eligible employees (contributors) in receipt of allowances payable to members of the staff of Ministers and certain office-holders of the Parliament and to officers and employees in the Australian Public Service performing duties as departmental liaison officers in the office of a Minister.

Regulation 1 provides that, in the amending Regulations, “Principal Regulations” means the Superannuation (Salary) Regulations.

Regulation 2 amends paragraph 5(1) of the Principal Regulations to exclude from its ambit an allowance referred to in the new Part IID and in respect of which a person has made an election under that Part. The effect is that the allowance is not treated as part of the person’s salary for the purposes of the Act.

Regulation 3 amends subregulation 7(2) to clarify the intention behind the subregulation that, where an allowance of a prescribed kind (listed in regulation 4) is to be treated as salary for the purposes of the Act, it is to be included in that salary only to the extent of the lowest rate (as increased by any general salary increases) at which it was payable to the person during the preceding 12 month period.

Regulation 4 inserts a new Part IID into the Principal Regulations relating to contributors in receipt of allowances payable to a member of the staff of a Minister or office-holder or as a departmental liaison officer. The new Part comprises new regulations 8M and 8N as explained in the paragraphs that follow.

Section 8M defines various terms used in Part IID. The terms refer to the persons and allowances to which the Part applies. The persons are contributors who:

(a)        are members of the staff of a person who is, or has been:

(i)         a Minister;

(ii)        the Leader or Deputy Leader of the Opposition in either the Senate or the House of Representatives;

(iii)       the Leader or the Deputy Leader in either the Senate or the House of Representatives of a recognised political party; or

(iv)       a senator or member of the House of Representatives empowered, in accordance with section 12 of the Members of Parliament (Staff) Act 1984 to employ staff; or

(b)        are officers or employees in the Australian Public Service and are attached to the office of a Minister as departmental liaison officers.

The allowances are those payable to a contributor solely because he or she is wholly occupied in performing duties as a member of the staff of a Minister or office-holder or as a departmental liaison officer.

Subsection 8N(1) provides that where, immediately prior to the date of commencement of the amending Regulations, an allowance referred to in section 8M was payable to a contributor referred to in that section, and continues to be so payable, the contributor may within 3 months after that date (or such further period as the Commissioner allows) elect that the allowance not be treated as salary for the purposes of the Act.

Subsection 8N(2) provides that where, on or after the date of commencement of the amending Regulations, an allowance referred to in section 8M becomes payable to a contributor referred to in that section the contributor may within 3 months (or such further period as the Commissioner allows) after the date on which the allowance became payable elect that the allowance not be treated as salary for the purposes.

Subsection 8N(3) - provides that a contributor who has made an election under subsection 8N(1) or (2) is not precluded from making an election under subsection 8N(2) in relation to an allowance that is payable in relation to duties or work performed subsequent to, but not continuously with, the duties or work that gave rise to the allowance in relation to which the earlier election was made.

Subsection 8N(4) provides that, where the person makes an election under subsection 8N(1) in relation to an allowance that is being treated as salary for the purposes of the Act, the allowance is to cease to be so treated on and from the date of the election. Where the allowance is not being treated as salary for the purposes of the Act at the time the election is made, that particular allowance is not to be treated as salary for the purposes of the Act from any future date on which it might otherwise qualify to be so treated.

Subsection 8N(5) provides that where an election is made under subsection 8N(2) in relation to an allowance, that particular allowance is not, at any time, to be treated as salary for the purposes of the Act.