Bills Digest No 74 1995-96 Ministers of State Amendment Bill 1996


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WARNING:
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

CONTENTS

Passage History

Date introduced:2 May 1996
House: House of Representatives
Portfolio: Administrative Services
Commencement: Royal Assent

Purpose

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.

Background

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 Senators.

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 salaries.

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 person.

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%).

Main Provisions

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.

Endnotes

(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.

Contact Officer and Copyright Details

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 amendments.

PRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public

ISSN 1323-9032
© Commonwealth of Australia 1996

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1996.

This page was prepared by the Parliamentary Research Service, Commonwealth of Australia
Last updated: 10 May 1996


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