Unfunded superannuation is a sleeping giant. Thousands of ACT public servants have rights to superannuation pay-outs on retirement that will have to come out of consolidated revenue. The Auditor-General, John Parkinson, estimates that between 2001 and 2005, for example, about $175 million in superannuation will have to be paid out. In June, 1996 the unfunded liability was $602 million, about $2000 per head.
The superannuation was part of an overall picture painted by Mr Parkinson that the ACT is living beyond its means and that by early next century this will have a severe impact on the ACT.
Until the Carnell Government introduced accrual accounting, government seemed blissfully ignorant of the superannuation time-bomb.
Now, it may well be that accrual accounting, where the real costs of everything government does have to be accounted for, rather than just the current expenditure, is a means of justifying policy directions that shrink the public sector, but good policy is still dependent on an accurate picture of costs. Indeed, the philosophy behind accrual accounting should demand that the cash value of long-term environmental and social costs are also factored in to policy formulation.
In any event, someone ought to be done about unfunded superannuation. In fairness to existing public servants, their entitlements should be quarantined from new arrangements. But in fairness to private-sector workers and those out of the workforce who will ultimately have to pay for these open-ended superannuation arrangements, a new fully funded scheme for all new public servants should be set up as soon as possible.
The trouble is that (whoever is in government) such a plan would give political capital to the Opposition and Independents who never view these things in the overall Budget context for the good of the ACT, but in terms of vote-catching from a small group. They should heed Mr Parkinson’s call for a constructive approach.