The main public sector union is seeking an urgent meeting with officials after the Albanese government revealed plans to protect itself from a potential $8 billion bill in unpaid superannuation for public servants.
As the Federal Court decides whether the Foreign Affairs Department owes three employees missing super - a case first revealed by The Canberra Times in 2019 - Finance and Public Service Minister Katy Gallagher announced on Tuesday the government would introduce a bill to amend laws retrospectively in order to minimise the "significant windfall increases" in superannuation benefits that could be paid out following the court's ruling.
The Community and Public Sector Union responded sharply to Senator Gallagher's announcement, criticising it for "pulling the rug out" from under distressed public servants.
The landmark court case, put forward by three department staff, argues superannuation payments are owed on rent-free housing provided by the government going back to 1986.
If the court rules in favour of the DFAT staff, it could set a precedent allowing thousands more to come forward and resulting in a bill reaching into the billions.
The union's deputy national secretary, Beth Vincent-Pietsch, said it is seeking an urgent briefing with the Finance Department to discuss the impact of proposed amendments.
"The payment of superannuation on rent-free housing has been a long and fraught issue for workers in areas of the APS," she said in a statement to The Canberra Times.
"It is very disappointing for those involved in the current Federal Court case, and those affected by the outcome, to have the new government change the goalposts in this way.
"Members affected by this superannuation issue are highly distressed by the government decision that pulls the rug out from under the case before the Federal Court."
Senator Gallagher said the government's bill will reduce the potential superannuation benefits resulting from the court ruling, which she described as "well beyond community standards".
"This is the type of unforeseen public administration issue that comes up from time to time and requires quick and effective response for certainty," the ACT senator said in a statement.
"We look forward to working constructively across the Parliament to secure support on the passage of this legislation."
Foreign Affairs Department staff Brendan Peace, Peter Fennell and Timothy Vistarini argued the Commonwealth did not pay them superannuation owed for a rent-free accommodation allowance they received on overseas postings and a "hardship" allowance as part of their salary on overseas postings.
The three public servants are fighting to include the allowances as part of their salary, which would result in additional superannuation payments being made available to their Public Sector Superannuation Scheme accounts on retirement.
The public servants' barrister, Lachlan Edwards, argued in April the senior officials, who had all worked within the public service for a number of years, had been provided with rent-free accommodation as part of their postings across cities considered "difficult".
The postings included Papa New Guinea's Port Moresby, Myanmar's Yangon and Solomon Islands' Honiara.
Mr Edwards said the officers were expected to stay in the government-arranged accommodation, which often came with round-the-clock security, following confirmation of their posting.
The allowances were compensation paid to them for the physical hardships and discomforts they faced due to the nature of the posting, and should be considered as part of their salary, he said.
But the Commonwealth, represented by Australian Government Solicitor representatives Tom Howe QC and David Hume, argued the three staff members were not entitled to any relief.
Mr Howe QC said the allowances given were provided solely based on the location of the role.
The payments were "not individual-centric, not position-centric, not duties-centric", Mr Howe QC said.
The government's lawyers claimed in their submission increasing the amount of the employees' salary for superannuation purposes would result in a shortfall in their contributions payable to the scheme.
Budget papers released in March identified the court proceedings as posing a fiscal risk to the federal government.
"Depending on the outcome of the case, there may be broader implications that represent a fiscal risk to the budget," the budget papers said.
Then-Finance Department deputy secretary Dr Stein Helgeby told an estimates hearing in 2019 it was going through records dating back to 1922 to determine the scale of potential superannuation repayments.
AFP alone in 2020 identified more than 9000 employees who were eligible for one of the allowances, estimated to cost the law enforcement agency $59 million at the time.