Ministerial Statement - Treasurer

The ravages of the global financial crisis require strong decisions, in the best interests of future of the state.

As the Premier and I have stated, that means confronting the challenges, and taking action.

Later today, I will introduce legislative amendments to the House to protect the interests of QSuper members. The amendments will close QSuper’s defined benefit account to new members, which will be made effective immediately.

Through generations of strong financial management we have been the only government in Australia with a fully funded superannuation scheme. This action is taken to ensure that is the case into the future.

This necessary action reflects the government’s determined focus on managing the State’s finances prudently through the current global financial crisis.

This action has been taken in the best interests of existing members of the state superannuation scheme, QSuper.

At this time of tension in world markets, the Government’s focus must be on ensuring the current entitlements of existing defined benefit members are maintained and the scheme’s liabilities are not exposed to the potential risks that flow from the collapse in global equities markets, in particular.

In recent years, few Government employees, just over 500 a year, have chosen to join the defined benefit scheme. The Government believes that closing the scheme is a responsible and necessary step at this time given market stresses.

Queensland is the only government with a broad based open defined benefit scheme. Other States, the Commonwealth and employers in general have stopped offering defined benefit schemes over the past 15 years. New South Wales, Victoria, South Australia, Western Australia and Tasmania all closed their schemes in the 1990s.

In QSuper, around 98% of all new members are remaining in the default accumulation arrangements – given today’s highly mobile workforce accumulation accounts are generally considered more attractive.

Make no mistake about the aim of this move. It is 100% about protecting the entitlements of existing 83 000 members of the defined benefit scheme.

To be clear, every existing member of the scheme will have all their rights and entitlements preserved.

The change is prospective only, closing off the scheme now to protect the existing members into the future. Importantly, there will be a restricted avenue of entry for members who were in the process of transferring into the defined benefit scheme as at today.

Through strong management QSuper has been a consistent top end performer in the superannuation industry, recently recognised as a top 10 Australian fund by Superratings.

We intend to keep it there, for the benefit of all its members.

The government remains committed to employees and employers jointly contributing towards funding an adequate retirement benefit.

I want to stress that the default accumulation member contribution of 5% of salary will still attract a Queensland Government contribution rate of 12.75%.

This employer contribution rate of 12.75% is above the 9% paid by every other State and in the general community.

It is above the 9% paid by New South Wales, the 9% paid by Victoria, the 9% paid by South Australia, the 9% paid by Tasmania and the 9% paid by Western Australia.

It is a contribution that is more closely aligned to the level of savings and contribution most experts advise to ensure adequacy of retirement incomes.

This will continue to be a key point of attraction for the state as an employer.

Global equities markets have collapsed 40% since their high in October 2007. All investment funds are under pressure and now is not the time to run away from making tough decisions.

This action is being taken to protect the interests of members of QSuper, now and into the future, and to protect the legacy of our fully-funded superannuation scheme.

It preserves the rights of existing members of the defined benefit scheme, it ensures the other members of QSuper have confidence about QSuper’s financial strength and it ensures the best interests of all Queenslanders are protected as we confront the rising force of the global financial crisis.

12 November 2008