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