‘Stupidity’ of PS super rules a threat to ACT economy, warns Business Outlook

Ian Bushnell 14 October 2019 102
Bank notes

Poor retirement incentives could harm the ACT economy. Photo: File.

The ‘quirky’ superannuation arrangements of Canberra’s Commonwealth public servants have been singled out as a threat to the ACT economy in the latest Deloitte Access Economics Business Outlook.

The report lashes what it calls the stupidity of incentives for public servants to retire before 54 years and 11 months at a time when the rest of the nation is being to encouraged to work longer to boost workforce participation.

Intergenerational Reports have cited the importance of Australians working longer to deal with challenges facing the economy and the Federal Budget from an ageing population and rapid increases in the cost of healthcare technologies.

The Business Outlook says the ACT has not shared in the “key national good news story” of higher workforce participation, especially among older Australians and women. A key reason being the perverse incentive for workers to leave the workforce in their mid-50s in the ACT.

“One of the great strengths of this economy has been that we’ve had lots of workers given the size of our population. But that key outperformance has been fading faster than a Floriade flower in October,” the report says.

“In fact, the gap by which Canberra’s participation rate exceeds its national cousin has eroded by almost two-thirds since the mid-2000s (from eight percentage points down to three percentage points). And while a bit of that slide is because relatively more Australians are choosing to grow old in the nation’s capital than was formerly the case, the bulk of it is because of stupidity.”

The super rules don’t stop people working in a different job but it’s the wrong age for retirement if people would like to work longer, the report says.

Acknowledging that there is no easy fix to the problem, the report says it may slowly eat into what has been a long-running pillar of Canberra’s relative prosperity.

The Outlook sees the ACT growing at a steady rate amid sluggish job growth, slowing residential construction and some uncertainty around Commonwealth Government spending, but strong population growth, ACT Government spending and a solid higher education sector will help sustain demand.

The public service efficiency dividend will continue to hold jobs back and the salary cap will keep wages down but a better Budget position due to commodity prices may give the Commonwealth some ‘wiggle room’ in the spending area.

“The number of job vacancies as a share of the labour force continues to increase, which suggests that the employment outlook can improve,” it says.

And the ACT continues to have the lowest unemployment rate in the country.

The resilience of the housing market is also a factor that will maintain confidence and give retail a boost, with home prices continuing to hold up compared with other centres and interest rate cuts likely to attract more buyers. The negative side will be persistently high rents, growing well above the rates elsewhere in Australia

Identified risks to the economy include a decline in housing approvals, the number of apartments being built and a cooling off in commercial construction, with the value of work done falling for the first time since late 2017.

“Building approvals have been heading backwards since late 2018. That points to the potential for some lean times ahead for ACT commercial construction,” the report says.

Engineering construction is taking a breather with the completion of light rail stage 1 but this year’s ACT Budget set aside half a billion dollars for new capital works over the next four years, and more than a billion dollars for future capital works, including light rail stage 2, the $420 million expansion at Canberra Hospital and the $100 million housing strategy.

There is also a range of mixed-use projects under construction. On the Commonwealth side, the $500 million expansion of the Australian War memorial is due to to start in 2020.

The low Australian dollar is helping to draw international tourists and students to the ACT, but the education boom faces challenges, including a looming cap on international students at the ANU.

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102 Responses to ‘Stupidity’ of PS super rules a threat to ACT economy, warns Business Outlook
Pandy Pandy 10:47 am 16 Oct 19

Only what 2000 left in the CSS. And most would not be in Canberra I bet.

Capital Retro Capital Retro 9:45 am 16 Oct 19

“Not many people left in the public service that would be in CSS.”

Maybe so but the surviving partners of any deceased members of the CSS still get a fair slice of this unfunded but taxable gift. I heard the CSS contingent liability of the CSS members who transferred to the ACT public service when self-government was forced upon us is between $5 – $10 billion, unfunded of course.

Anthony Grice Anthony Grice 8:26 am 16 Oct 19

What does the 54/11 got to do with the current economic sh1t hole we are in. Good for those who are in the CSS and retire early, as now, that money WILL flow into retail. And if they don't, that's not there problem, they worked as "battery hens" long enough

Jeff Knight Jeff Knight 10:36 pm 15 Oct 19

God bless CSS 😂

    Murray Steed Murray Steed 11:09 am 16 Oct 19

    Jay Kay is anyone on the CSS still working?

    Jeff Knight Jeff Knight 11:55 am 16 Oct 19

    Murray Steed I believe there’s only a couple of thousand CSS members still working, and that number is dwindling fairly quickly.

    Chris Cummins Chris Cummins 2:37 pm 16 Oct 19

    Jay Kay alleluia brother

Elisa Joy Harris Elisa Joy Harris 9:26 pm 15 Oct 19

Sounds likes like the green eyed m monster to me. There are very few 54/11 CSS members left..

    Chris Howe Chris Howe 8:29 pm 18 Oct 19

    Lazy analysis hoping that anti-public service sentiment will see it slip through without too much scrutiny. Similar to an IPA paper on public service pay and conditions I read a few years ago. It was written by a PhD candidate, but the analysis and logic were so poor that it would have got a fail if turned in as a first year paper.

Lorraine Anne Lorraine Anne 8:53 pm 15 Oct 19

The politicians are doing alright, they always will, they seem to have different rules for their super, even if they are in government for a short time and look at the privileges they get when they retire. Different rules for them.

    Peter Hatfield Peter Hatfield 9:14 am 16 Oct 19

    Lorraine Anne Pollies get the same 15.4 % contributions to their super fund other public sector employees get. They closed the pollies defined benefit scheme when the PSS closed.

    Lorraine Anne Lorraine Anne 10:23 am 16 Oct 19

    Good to hear, we all should be the same.

Pido Boon Pido Boon 8:31 pm 15 Oct 19

We work till 67 in Holland...

Maureen Trevanion Maureen Trevanion 7:43 pm 15 Oct 19

Not many people left in the public service that would be in CSS.

Peter Maloney Peter Maloney 2:57 pm 15 Oct 19

I agree what a waste of talent. At 55 I am just starting to hit the high notes.

Toni Brown Toni Brown 1:45 pm 15 Oct 19

Worked well for me swapping out of CSS to PSS. There’d be very few left in CSS.

Snez Vujic Snez Vujic 11:10 am 15 Oct 19

Not every PS is under this scheme- I wish I was! Think the bigger issues at hand are CEO’s and retired politicians salaries/bonuses and post retirement entitlements.

Whoever wrote this stupid report is just trying to deflect from the real issue and who the real threats are to our economy both state and federal

trudi trudi 11:03 am 15 Oct 19

The old CSS was phased out around 1990/91, so there wouldn’t be too many members left.

puppyfat67 puppyfat67 10:27 am 15 Oct 19

Also it fails to mention that PSS members made redundant can access their pensions at any age, I got mine at 51

Yvonne Truesdale Yvonne Truesdale 10:18 am 15 Oct 19

As this only applies to those who were in the 'old' CSS and kept all their entitlements back around 1985 when a lot took the opportunity to take cash out and change their arrangements, I would think that the number of people this applies to is diminishing at a rapid rate or they have all left by now.

Eleanor McMillan Eleanor McMillan 10:02 am 15 Oct 19

People are not welcome in the workforce over 40. Ageism is alive and well

Peter Lavers Peter Lavers 9:59 am 15 Oct 19

Other public service entities bully older workers out anyway (experience of friends in SA and NSW state teaching services). State and federal public services don't walk the talk re older workforce. Hopefully the 54/11 retirees spend local, in which case it's good for the economy!

Gabrielle Adaw Gabrielle Adaw 9:16 am 15 Oct 19

There are very few employees left who have access to the 54 11 option. Certainly not enough to be a threat to the economy. Those that do retire from the public service at this age usually opt to continue working in some capacity elsewhere. This is a very poor standard of research and reporting.

Rhonda Gray Rhonda Gray 8:16 am 15 Oct 19

A lot of people opted to change to PSS and PSS2 when they opened. I know a few long timers and most are NOT in CSS. Service to an employer and paying into a fund for 30+ years... you earned it.

Anderson Cheung Anderson Cheung 6:02 am 15 Oct 19

This article is 30 years too late?

Jim Jim Jim Jim 5:54 am 15 Oct 19

If someone can retire early in this town good luck to them. It also creates an opening for a new starter who might be a young person just beginning their career. Entry points to the public service can be incredibly tough for young people with limited experience so again not sure if turnover is a bad thing at all? The language used in this ‘report’ as quoted is extremely immature I’m surprised an organisation of this caliber would let that fly.

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