This Digest is prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments.
This Digest was available from 13th May 1996
Date introduced:2 May 1996
House: House of Representatives
Portfolio: Administrative Services
Commencement: Royal Assent
To provide for an increase in the sum payable for the salaries
of ministers for 1995-96 from $1.615 million to $1.640 million and
a decrease in the sum payable for subsequent years from $1.640
million to $1.6 million.
Section 66 of the Constitution provides:
There shall be payable to the Queen,
out of the Consolidated Revenue Fund of the Commonwealth, for the
salaries of the Ministers of State, an annual sum, which, until the
Parliament otherwise provides, shall not exceed twelve thousand
pounds a year.
Parliament has provided otherwise by enacting the Ministers
of State Act 1952 (the Principal Act) which places a limit on
the annual sum appropriated from the Consolidated Revenue Fund for
ministerial salaries. The Keating Government determined that
ministerial salaries should be adjusted on the same dates and by
the same percentages as the basic salaries of Members and
The Principal Act needs to be amended from time to time to cover
increases awarded to Members and Senators.
The salaries of Members and Senators are fixed in accordance
with the provisions of the Remuneration and Allowances Act
1990, under which salaries are adjusted in line with the
highest level of Senior Executive Service (SES) Band 1
The increase in the annual sum payable for the salaries of
Ministers proposed by the previous amendment to the Principal Act,
in 1994, was a consequence of increases awarded to Members and
Senators of 1.4% and 1.5% ratified by the Industrial Relations
Commission for members of the Senior Executive Service of the
Australian Public Service.
The amendments proposed by this Bill to the annual sum payable
for the salaries of Ministers give effect to a post election
decision of the Howard Government to reduce the salaries payable to
ministers not in Cabinet. The proposed reductions have resulted in
a two-tiered pay structure under which the 15 Cabinet ministers
receive a base ministerial salary of $52,862 (drawn from amounts
appropriated under the Principal Act) on top of the rate payable as
a Member or Senator, approximately $80,000 (drawn from amounts
payable under the annual Appropriation (Parliamentary
Departments) Act. (1) The 13 members of the outer ministry are
to receive a ministerial salary of approximately $122,000,
approximately $10,000 less than Cabinet minsters.
The rationale for the cuts is reported to be a reflection of
what the Prime Minister saw as the differing workloads for Cabinet
ministers and their junior colleagues, and a demonstration of the
Government's zeal for a leaner administration. (2)
The rationale for the increase from $1.615 million to $1.640
million the sum payable for the salaries of ministers for 1995-96
proposed by this Bill is said, in the Second Reading Speech to the
Bill, to be necessary to meet increases in salaries for ministers
under the previous government.
While the Government's decision to reduce salaries payable to
ministers not in cabinet has been received favourably by the
majority of media commentators, it has been reported by certain
commentators that the pay cut will only result in token savings of
between $100,000 and $130,000 a year.(3)
It may be noted that for the purposes of total cost, a reduction
in the gross salary of ministers will be offset by the tax payable
on that income. Subsequently, any cut in the gross salary of
ministers will be offset by lower tax receipts from that
If ministers are paying full marginal tax rates on their income,
reductions in tax received from those people will reduce the gross
saving to government from a cut in their gross salary by
approximately half (the top marginal rate of 47% plus the Medicare
levy of 1.5%).
The effect of item 1 of Schedule 1 of the Bill is to increase
from $1.615 million to $1.640 million the sum payable for the
salaries of ministers for 1995-96 and decrease the sum from payable
for subsequent years from $1.640 million to $1.6 million.
(1) The Sydney Morning Herald, 16 April 1996.
(2) The Sydney Morning Herald, 16 April 1996.
(3) The Australian Financial Review, 17 April 1996 and
The Canberra Times, 18 April 1996.
Ian Ireland Ph. 06 277 2438
Bills Digest Service
9 May 1996
Parliamentary Research Service
This Digest does not have any official legal status. Other
sources should be consulted to determine whether the Bill has been
enacted and, if so, whether the subsequent Act reflects further
PRS staff are available to discuss the paper's contents
with Senators and Members and their staff but not with members of
© Commonwealth of Australia 1996
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Last updated: 10 May 1996
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