The Labor government has rushed through legislation protecting it from a potential bill of $11 billion in unpaid superannuation owed to public servants, defending it as a "sane" move and gaining the Coalition's support.
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After passing the House of Representatives on Thursday morning, the extraordinary laws are set to retrospectively change superannuation legislation and block a possible liability arising from a looming Federal Court decision on claims that three Foreign Affairs Department employees are owed unpaid super on rent-free housing.
Financial Services Minister Stephen Jones defended the bill in parliament, saying the government was dealing with the matter urgently to provide certainty to employees and litigants in the Federal Court matter.
"No sane government could do anything other than what we are proposing to do today," Mr Jones said.
"These are not small amounts of money."
The bill passed the House of Representatives 116 to five, opposed only by Greens MPs and independent Monique Ryan. Independents Zoe Daniel and Sophie Scamps recused themselves from the debate after declaring a conflict of interest. Ms Daniel said she received rent-free housing while an ABC foreign correspondent, and Dr Scamps said she had a family member in a similar situation.
The bill was introduced in the Senate and passed the upper house on Wednesday, facing opposition from the Greens and gaining support from the Coalition and ACT independent senator David Pocock.
Its fast passage through parliament this week raises questions about the future of the Federal Court case, which was due to be decided soon and was flagged in government budget papers earlier this year as posing a fiscal risk to the Commonwealth.
Greens leader Adam Bandt on Thursday morning protested the government's efforts to rush the bill through parliament, saying MPs were not given time to consider and debate it, despite its financial consequences.
"It is not clear there's a compelling case for urgency that this can't be dealt with in the normal course," he said.
"We should not be in the practice of forcing people in this house to, especially where there's such a large number of crossbenchers here, to just take something at face value and push it through without the opportunity to have the usual debate.
"In terms of what we know about this bill, we're in a position where we don't know enough to be able to support it."
Mr Bandt said the Greens would oppose the bill "in large part on process grounds", and that its rushed passage through parliament set a bad precedent.
"This is bad process, it's a bad way to start the parliament and we can't support it."
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Liberal National Party MP and former assistant treasurer Stuart Robert said the Coalition backed the bill, and that it was consistent with the stance the former Morrison government took on similar matters.
He said the former government had been monitoring the potential fiscal risk of a possible court decision favouring the three public servants.
Mr Robert admitted it was rare for parliaments to pass retrospective laws dating back to the 1980s on matters before the courts.
"This issue has been considered by the government soberly and sensibly and we thank them for that," he said.
The former Morrison government minister said the courts did not welcome federal parliament interventions in cases through retrospective laws.
"Whilst I appreciate the court sentiments, it is this place's role to legislate, not the court's," Mr Robert said.
"It is the court's case to interpret legislation. And if this place is not satisfied with what the other separated power - in that the court - has done, it is implied upon this place to seek to make it right."
The legislation removes a part of public service superannuation laws that says the use of rent-free accommodation for reasons relating to a public servant's role or work is an allowance to be treated as salary for superannuation purposes.
The government argued in its explanation of the bill that it would "regularise" a Commonwealth practice, starting after the introduction of the fringe benefits tax regime in 1986, not to treat rent-free housing as salary for superannuation purposes.
"Since then, it appears, as a general rule, that neither employers nor employees have made superannuation contributions that have taken account of the value of rent-free housing," the bill's explanatory memorandum said.
The landmark Federal Court case put forward by the three Department of Foreign Affairs and Trade employees argued superannuation payments were owed on rent-free housing provided by the government.
DFAT 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.
If the court ruled in favour of the DFAT staff, it could mean the Commonwealth would owe thousands more public servants unpaid superannuation owed on rent-free accommodation during their overseas postings. The government has claimed the potential bill could be between $8-11 billion.
Claims of a multibillion dollar liability
Finance and Public Service Minister Katy Gallagher announced on Tuesday the government would introduce the 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.
She said a ruling in favour of the DFAT staff could have "widespread, significant, unintended and inequitable financial ramifications for Commonwealth employees and the Commonwealth".
"Some Commonwealth employees could receive significant windfall increases in superannuation benefits that are well beyond community standards (in some cases in the millions of dollars) only because they have received rent-free housing," her statement said.
"A small cohort of Commonwealth employees could incur large, unexpected debts for unpaid member contributions in return for little or no increase in their superannuation benefits, and the Commonwealth could incur significant additional costs to meet increased superannuation benefits and additional employer contributions."
The bill would protect against these outcomes, and ensure the entitlements of Commonwealth employees remained fair and reasonable, and a responsible use of public money, she said.
The retrospective repeal will not apply to Commonwealth employees with a default superannuation salary that explicitly included the value of rent-free housing provided to them from July 1, 1986 to February 28, 2022, as evident in contributions having been paid on that basis.
The government's efforts to push the bill through parliament follow a decision, effective from March 1, by the Morrison government to remove rent-free accommodation from regulations listing income for superannuation purposes.
Labor MP for Fenner Andrew Leigh on Thursday stridently voiced his support for the new legislation on Twitter, claiming the three DFAT employees could receive up to $11 million each in superannuation if the Federal Court decided in their favour.
"It would cost the budget billions. The Greens Party are voting for the millionaires," Dr Leigh said.
It is understood the public servants in the case regard the $11 million figure as a gross overestimate of the potential sum involved, and that it would have only applied to a small minority of senior officers in extraordinary circumstances.
The passage of the legislation this week has thrown the Federal Court case into uncertainty. BAL Lawyers, representing the three public servants, declined to comment.
The Community and Public Sector Union has been approached for comment.