The federal government is trying to block a civil servants’ pension claim that threatens to cost the Commonwealth up to $8 billion.
- Court examines whether civil servants are entitled to billions more in superpayments
- Up to 10,000 civil servants could be affected by the claim
- The feds are trying to block the payments, if the court finds them due
Finance Minister Katy Gallagher briefed Labor MPs this morning on a bill that will come to Parliament on Wednesday in a bid to crush a claim currently before the courts.
The unusual move was prompted by an ongoing federal court case brought by three Department of Foreign Affairs and Trade (DFAT) employees.
Through their attorneys, Brendan Peace, Peter Fennell, and Timothy Vistarini argued that DFAT had improperly included their free housing and certain allowances as part of their pay, while assigned to the foreign.
The government bill would retrospectively repeal a paragraph of existing legislation which includes the value of rent-free accommodation in the default retirement pay of Commonwealth employees in certain circumstances, which the men are using to bring the case.
If DFAT employees are successful, the government has said, an additional superannuation could flow into their schemes and could also affect around 10,000 civil servants serving overseas between 1986 and 2022, costing the Commonwealth between $3 billion and $8 billion. of dollars.
A spokesman added that this could lead to “windfall gains” in some cases, potentially worth millions of dollars, which the government considered “far beyond community standards”.
The implications of the case were flagged in this year’s federal budget and a number of agencies are likely to be caught up in the case, including the Foreign Office and the Australian Federal Police.
A press release issued on Tuesday by Senator Gallagher argued that the government had decided to act now to ensure that “the rights of Commonwealth employees remain fair and reasonable and, above all, that they continue to represent a responsible use of taxpayers’ money.”
He added that the case could have unforeseen ramifications and mean that some Commonwealth employees could find themselves in unexpected debt for unpaid pension contributions.
Lawyers for the three men confirmed the civil case was pending but declined to comment to the ABC.
The federal opposition will likely support the bill and help get it through Parliament quickly.