A Gravy Train on Super Steroids

I’ve been snuggled up with the latest report to the Federal Finance Department by some Mercer Consulting actuaries on just how much the gold-plated Commonwealth and Public Sector Superannuation Schemes (CSS and PSS) are costing the country. Ouch!

People say actuaries lack personality. Not so. My neighbour is an actuary and his Volvo bumper sticker says, “Actuaries do it with models.” The actuaries who did the modelling work for the feds are Richard Boyfield and Guy Holley. A third actuary, David Knox, checked their sums and gave the arithmetic 10 out of 10.

They projected  the government super schemes’ unfunded liability last month would be $158.5 billion, equivalent to 7.37 per cent of GDP. The gate slammed on the last new member on June 30, 2005, but the unmet cost of this lifetime indexed pension scheme for cardigan-wearers will keep rising way out to 2034, when it’ll peak at $182.9 billion. Eventually, when I’m aged 120, it will subside to a more manageable $60 billion.

We can express it another way: if federal employers such as those at the ABC had to actually fund this gravy train for their elderly celebrities, it would work out to 31.9 per cent of salary. For reasons best known to actuaries Richard, Guy and David, this exorbitant cost rose by 3.9 percentage points between 2017 and 2020. They agree this percentage will keep rising for another 10-15 years. They haven’t put those numbers in; maybe they don’t want to induce George Floyd-style rioting by the private sector.

Mercifully, brilliant Liberal Treasurer Peter Costello set up the sovereign Future Fund with $60 billion in 2006 just to cover such unfunded super liabilities. By June 2021 this fund had grown to $197 billion, thanks to 10-year returns averaging an amazing 10.1 per cent per annum, and a giant 22 per cent return in 2020-21 – notwithstanding that a heap of Costello’s minions during COVID were working from home in their dressing gowns.

The Labor government from 2007 would have plundered the Fund, except that Costello had inserted a poison pill in the legislation to prevent just that. (Compare Treasurer Costello and his achievement with Labor’s past Treasurer and ex-ALP President Wayne “Swanny” Swan). The Coalition agreed a few years back not to even start any drawdowns from the fund until at least 2026-27, to allow its assets to keep piling up. Albo’s new Treasurer, Jim Chalmers, might be less reticent.

The CSS/PSS members are offered a lifetime indexed pension that on death reverts to spouse at a 67 per cent rate. The surviving spouses also get 11 per cent extra per child – and “student child” includes hulking brutes as old as 25 and starting their PhDs. There’s a joke told at public service water coolers about a sweet 18-year-old who marries an ailing 80-year-old PSS pensioner to get the lifetime reversionary benefit – involving circa 70 years’ worth of pension. By the way, our actuary informants say a government retiree at 65 can expect to live on the CSS/PSS indexed pension to age 87.7 (male) or 89.9 (female).

Just how juicy are those indexed pension schemes? For most members, maximum benefit under the PSS is ten times final salary (i.e. pay on last day of service, not averaged over three years). Lump sums can be converted to that lifetime indexed pension using a generous conversion factor, ranging from 1/12 at age 55 to 1/9 at age 70. So generous is this conversion ratio that 90 per cent of the public service retirees opt for the pension, not a lump sum. There’s also generous side-benefits to do with your own and employer “productivity” contributions.

The ultimate scandal is the so-called 54/11 rule for CSS members. It works like this: You resign a month before turning 55, preserving your super benefits. Then, a month and a bit later, now aged 55, you advise the CSS that you are retiring, unlocking much better super benefits than if you simply retired at age 55. Here’s advice from one financial advice firm:

It has the potential to provide as much as $200,000 or more in additional retirement benefits over the pensioner’s lifetime, with the effect that most Commonwealth Public Servants who are 54 and 11 months of age would often need to work an additional five years or more in their current job in order to be better off financially in retirement.

In addition, having triggered this strategy, there is nothing to prevent a 54/11 candidate making the decision to return to work in a part time or consulting role in the public service. Many are ultimately re-hired by their former departments to work on their own terms, with the opportunity to further boost their retirement incomes. Others choose to have a very rewarding career change, knowing their retirement is financially secure.

Gravy train? It’s a gravy train on steroids.

I HAVE to admit this essay has been a bit bland so far and needs spicing up, so I’ll focus on ABC people and their super.

You know how, on the ABCTV News, every item about government policy has to involve a householder (preferably from a minority and ideally identifying as Aboriginal) who bleats how they deserve more government money. I’ve been trawling for similar sadnesses of ABC types who joined after 2005 and aren’t in the pension aristocracy there.[1] Actually, taxpayers’ one billion-plus annually for the ABC does afford these latecomers a 15.4 per cent-of-salary handout for their retirement, but this goes to a dreary “accumulation” super scheme. That 15.4 per cent is still well above the statutory minimum of 10 per cent for regular Australians. And regardless of their super deal, ABC types can all access salary packaging for stuff like cars, childcare, laptops, and posh airline lounges.

 Here’s my back-of-envelope research on ABC celebs who were eligible for the pre-2005 gold-plated super schemes. Unless they were unlucky or bad managers, they would have signed up. I’ll include some recent retirees, marked ‘Rd’, just for fun.[2]

The princeling of ABC “retirees” is Tony Jones, who in his heyday was the ABC’s top-paid presenter. He still hangs around, doing lucrative odd jobs with ABC spouse Sarah Ferguson in the typical style of ABC celebrity once-weres. As the ABC told me last September,

Tony is not an ongoing ABC staff member but continues to make contributions by agreement with program makers.

Thus the happy couple jetted off to Washington early last year to do a belated joint effort on the so-called January 6 “insurrection”, with Ferguson spruiking and Jones producing at taxpayer expense. The ABC’s regular team in the US must lack the smarts to do such work.[3] As Jones put it: 

Washington is obviously the other side of the great global coin at the moment, probably the biggest story in the world. And maybe the biggest story in American political history is occurring as we watch, and where we are on our way there very quickly to do the first Four Corners program of the year. So Sarah will be reporting that, I’ll be producing it. So we’re teaming up in our bubble. And it’ll be a Washington bubble.

Here’s some names, first the APJHs (Assumed Pension Jackpot Hitters)

Tony Jones, Leigh Sales, Fran Kelly, Geraldine Doogue, Kerry O’Brien (Rd), Michael Rowland, Matt Wordsworth (Qld TV news), Juanita Phillips, Craig McMurtrie (now Editorial Director), Tamara Oudyn (Vic TV news presenter), Jessica Harmsen (SA TV news presenter), Zoe Daniel (Rd and taken her teal politics successfully to Canberra), Virginia Trioli, Barrie Cassidy (hanging around), Jon Faine (Rd), Mary Gearin, Richard Glover, Norman Swan the celebrity medico/journo, Lisa Millar, Sally Sara, Sophie Scott (health journo), Guy Stayner, Mark Willacy, Louise Yaxley; Gavin Fang.

Arrived too late for ritzy super

Andrew Probyn, Sarah Ferguson, Laura Tingle, Louise Milligan, Annabel Crabb, Pat Karvelas, Julia Baird, Stan Grant, Justin Stevens ( new News Director), Karina Carvalho, Nicole Asher, Bill Birtles, Kathryn Diss, David Lipson, Tracey Holmes, Benjamin Law, Caro Meldrum Hanna, climate doom-monger Michael Slezak, Tom Switzer, Amanda Vanstone, Richard Willingham, Daniel Ziffer, Conor Duffy, Leisa Bacon, Michelle Ainsworth (new National Politics Editor).

Uncertain (ABC stints both before and after the July 2005 cut-off):

Jonathan ‘Fox Hunter Green, Paul Barry, Ellen Fanning, Jeremy Fernandez, Sally Neighbour (just retired), Linda Mottram, Raf Epstein.

You’re probably keener to know what these ABC celebs are paid, rather than pension stuff. Alas, on that score, I can’t be of much help.

By contrast, the BBC publishes vast annual detail of pay of its on-air talent who earn more than £150,000 salary ($A264,000). This was quid pro quo for a new charter from the government guaranteeing a decade’s funding from the UK’s TV licence fee, currently £159 a year. (The ABC is funded instead from general tax revenue).[4]

After some whingeing, the BBC now voluntarily discloses not just pay but even how much work the “On-air Talent” do to earn it, e.g. the first-listed star in the 2021 annual report (p87-88) is a Mishal Husain, who got £275-279k for the Today program: 130 presentation days – News and Current Affairs; 20 presentation days for BBC One; five episodes of From our Home Correspondent.

Another example involves BBC Radio 1, and star Scott Mills. He’s paid £375-379k for putting out 230 editions of The Scott Mills Show, 45 editions of The Scott Mills Show and Chris Stark Show on Radio 5 Live, and Cover on Radio 1 and Radio 2.

Moreover the BBC last year took an axe to its tall poppies’ pay. It got rid of some drones and cut the cost of others, saying:

 Significant reductions have also been agreed with individuals who appear towards the very top of this list.

Over here, ABC brass insist to Parliament that they can’t disclose talents’ pay by name because it would breach the Privacy Act (and supposedly encourage poaching). As for also disclosing what ABC stars do to earn their pay, well that would flush out some wonderful performance metrics. For example, programs like Media Watch go into Christmas recesses for a sixth of the year (like mid-November to early February), and some ABC stars’ output is both meagre and tendentious in respect to the ABC’s statutory impartiality, to put it mildly.

We once did get an indication of ABC talent’s pay when an Adelaide ABC pay office staffer in late 2012 accidentally provided a spreadsheet of ABC pays in 2011-12 to Family First Senator Robert Brokenshire.[5] The Senator ordered it binned but one of his staffers leaked the data to The Australian a year later because he was disgruntled about Sydney staff’s growing dominance over the ABC.

I’ll take that list and assume 3 per cent annual pay growth for the ten years to today, made up of the 2-2.5% historic ABC annual pay growth and 1 per cent extra promotion. The list below of available stars is today’s purely-mechanical compounded estimate, with 2011-12 actual in brackets.

Juanita Phillips $424,048 ($316,454); Richard Glover $388,600 ($290,000); Leigh Sales $375,736 ($280,400); Fran Kelly $341,700 ($255,000); Virginia Trioli $315,762 ($235,644); Annabel Crabb $291,350 ($217,426); Norman Swan $259,151 ($193,397); Geraldine Doogue $243,897 ($182,013); and Sally Neighbour $229,543 ($171,301).

Obviously relativities in the 2012 list have re-shuffled in the following decade, and some names like Leigh Sales have shot to top on-screen responsibilities. The ABC’s ex-managing director, Michelle Guthrie, rashly told Senate Estimates in 2017 that her top presenter – female – earned about an eighth of the BBC’s top presenter (male) on $A3.7m, which suggests $A460,000. Whether it’s Leigh Sales or Sarah Ferguson I leave you to guess.

The 2021 ABC Annual Report is slightly more specific – there’s one talking head listed at $451,213 (including a $39,000 bonus). The report shows 21 staff who are not managers or senior executives – hence likely to be on-air talent – all paid above $345,000. Three are shown at $470,000-495,000 but this is muddy because of average $270,000 termination benefits. And there’s seven averaging $402,403 but with an average $109,000 terminations.

There’s five averaging $378,142, including skinny bonuses averaging only $11,000. Feel free to plug in types like Trioli, Kelly, Crabb, Glover, Neighbour, and Swan. Behind them are five averaging $362,165.

Don’t take any of this seriously but wait for full ABC disclosure, BBC-style, that could occur in some future geological era when a genuine conservative government is elected.

The final question: “Is the ABC really worth $1b a year?”

The BBC has just published a “Deprivation Study – what is life like without the BBC” where a random selection of 80 British households with a total of 200 members were deprived of the BBC for nine days and given £3.88 of their £159 licence fee back in compensation. (The £159 fee is compulsory whether or not a household watches the BBC). Were they happy with the cash back? On balance, the study found lots of the householders loved the BBC more than they originally thought.[6] Good for them.

But it does my head in trying to imagine a comparable study of our $1 billion-plus-a-year ABC. Could we make do without flagship ABCTV 7pm News and 7.30 basing their election coverage on Labor’s talking points? Without any conservative presenter but the constant on-screen presence of Guardian and equivalent Green/leftists – like Jane Caro that preachy silvertail and failed NSW Senate candidate? Without Louise Milligan’s expensively-defamatory tweets and me-too crusading against conservative politicians?[7] Without Sarah Ferguson’s excoriation of top-rating Fox News and burial of the corrupt Hunter Biden’s laptop incriminations and the ABC’s very own in-house pederast, the late Jon Stevens? (No “Revelation” there). [8] Without the ABC’s climate crowd faking that all our bad weather and reef bleaching is caused by emissions from our coal-fired power plants?

My suggestion for an ABC “Deprivation Study” goes like this. Temporarily abolish the ABC for the next ten years. At the end of the ten years, allocate the $10 billion-plus saved to personal tax cuts. Australians are then polled and if most prefer the tax cuts to the ABC, the ABC is abolished permanently.

I can’t see any downside, can you?

Tony Thomas’ latest essay collection “Foot Soldier in the Culture Wars” ($29.95) is available from publisher ConnorCourt

[1] The immediate cost to the ABC of the defined benefit schemes is slowly subsiding as staff age out. Five years back, the ABC was expensing $36m for its defined benefit super costs, compared with $32m for accumulation plans. By 2020-21 the costs reversed, with accumulation plans costing $45m vs only $25m for defined benefit plans.

[2] Many of the list would actually be on contracts, possibly augmented in exchange for opting out of super.

[3] In this odd-job context also think Kerry O’Brien and Ray Martin. Mr Martin got a fistful of ABC dollars for a 2015 report on whether QandA was biased. His answer: No. As “beloved national treasure” he hosted the ABC’s penis-obsessed 2020 lockdown series “At Home Alone Together” which attracted fruitless obscenity complaints from at least one respectable viewer (myself) plus my appeal to ACMA and the Commonwealth Ombudsman.

[4] Disclosure does not cover amounts to stars from BBC-linked production companies, only amounts from licence-fee revenue

[5] The pay office staffer thought he was sending only staff number data, but pay was embedded in the same spreadsheet.

[6] “42 of 60 households that initially said they would prefer to pay nothing and not receive the BBC or would only pay less than the full licence fee became willing to pay the full licence fee or more.”

[7] There’s a top Labor politician accused of historic rape by an alleged victim happy to go on the public record about it. The politician denies the claim and the police found he had no case to answer.

[8] Gerard Henderson, Media Watch Diary: “After its long silence on the civil case brought against the ABC by a victim of former ABC producer Jon Stephens – who pleaded guilty in 2017 to historical child sexual abuse while on an ABC assignment in 1981 – the ABC has finally settled a civil case brought by his victim. Stephens was facing additional charges of historical child sexual abuse with respect to two complainants when he died in December 2019…The ABC did not cover its own serious case of historical child sexual abuse and has not reported the civil case against the public broadcaster with reference to Stephens.”