Contents

Background Note Index

Background Note

Parliamentary allowances, benefits and salaries of office

Leanne Manthorpe
Politics and Public Administration

Important note - annual allowance data contained in the e-brief is correct as at 1 July 2008.

Introduction

The issue of parliamentary salaries, allowances and benefits generates public discussion and attracts media opinion. This background note provides relevant data, hyperlinks and documents pertaining to the entitlements of Australian federal parliamentarians. It is not a detailed discussion of the history and development of entitlements policy. It does not argue the merits or otherwise of the current arrangements.

Members of Parliament receive an Annual Allowance, an Electorate Allowance and other Benefits including travel, retirement travel and superannuation. Ministers and parliamentary office-holders receive a Salary.

Parliamentarians' benefits are complex and merit more detailed discussion than is possible here.

This e-brief will briefly look at benefits and focus on allowances and salaries. The legislative basis, fixing and linking mechanisms for allowances and salaries are explained. Links to the administering agencies are included for those who wish to read further on these matters.

The Appendix gives Annual Allowance, Electorate Allowance, Ministerial and Office-holder salary since 1996.

Note on Terminology  

Literature suggests that the terms used above to describe parliamentary entitlements are consistent with the terminology provided to us by the Constitution.⁽¹⁾ Legislation enacted since 1901 has introduced alternative terms now in common usage. For example, the Annual Allowance is often called Basic Salary, Benefits are loosely grouped as Entitlements and include the electorate allowance, and Salary is often Additional Salary, Salary of Office or Ministerial Salary.
This E-brief will use the terms as described in the Constitution and, where necessary, provide alternative terminology to prevent confusion.

Federal parliamentarians receive an Annual Allowance; Ministers receive a Salary; Parliamentary Office-Holders receive a Salary; MPs receive an Electorate Allowance and are entitled to receive other Benefits including Travel, Retirement Travel and Superannuation benefits.

Background  

A legislative and policy history of this topic can be found in Remuneration of Members of the Parliament of Australia Research Paper No 30 1999-2000 by Margaret Healy and Geoff Winter. Use this Research Paper for historical information only as the Appendices are now out-of-date. The paper will not be revised.

Administration  

Executive responsibility

The responsible Ministers, with selected adminstered legislation, are:

The Hon Kevin Rudd MP, Prime Minister.
Governor-General Act 1974

The Hon Lindsay Tanner MP, Minister for Finance and Deregulation.
Parliamentary Allowances Act 1952, Parliamentary Superannuation Act 2004, Parliamentary Contributory Superannuation Act 1948, Parliamentary Entitlements Act 1990, Ministers of State Act 1952, Members of Parliament (Life Gold Pass) Act 2002, Members of Parliament (Staff) Act 1984.
The Special Minister of State, Senator the Hon John Faulkner, has specific responsibility for administering some allowances and benefits under this legislation.

The Hon Julia Gillard MP, Minister for Education, Employment and Workplace Relations.
Remuneration and Allowance Act 1990, Remuneration Tribunal Act 1973

Parliamentary departments

The Department of the Senate and the Department of the House of Representatives (Chamber Departments) pay the annual allowance to parliamentarians and salary to parliamentary office-holders. The Chamber Departments provide advice on, administer, and pay the electorate allowance and some benefits including postage.

Department of Finance and Deregulation

Ministerial and Parliamentary Services (M&PS) in the Department of Finance and Deregulation (Finance) provides advice on entitlements to the responsible Minister and to Senators, Members, Office-holders and their respective staff. Finance administers the provision of some benefits and pays ministerial salaries.

Annual Allowance  

Constitutional basis for payment

Section 48 of the Constitution provides for the payment of Members of Parliament

48. Until the Parliament otherwise provides, each senator and each member of the House of Representatives shall receive an allowance of four hundred pounds a year, to be reckoned from the day on which he takes his seat.

Legislation and reports

Commonwealth legislation allows for payment of the annual allowance as described in the Constitution.

Remuneration and Allowances Act 1990 as consolidated, sets out the annual allowance payable to Senators and Members of the House of Representatives for the purposes of Section 48 of the Constitution (Schedule 3.)

Governor-General

The Remuneration and Allowances Act 1990 allows the Governor-General to make regulations (Sect 8A) necessary to allow the Act to be carried out.

Please see the regulations currently in force, Remuneration and Allowances Regulations 2005. Regulations are registered on the Federal Register of Legislative Instruments (FRLI).

Schedule 3 subclause 1(3) of the Act says that before the Governor-General can make regulations, the Minister "must consider advice from the Remuneration Tribunal about the proposed regulation."

Remuneration Tribunal

The Remuneration Tribunal is the independent statutory body which has an advisory role on an annual allowance for Senators and Members. The Remuneration Tribunal Act 1973 establishes the Remuneration Tribunal and defines its powers and functions. ss. 5(2C) of the Remuneration Tribunal Act 1973 says that

The Tribunal therefore reports regularly on parliamentarians' annual allowance to the Minister for Employment and Workplace Relations. See Report on Senators and Members of Parliament, Ministers and Holders of Parliamentary Office - Salaries and Allowances for Expenses of Office: Report 1999/01 dated 7 December 1999 for a comprehensive coverage of relevant issues.

The Report states that

This restates Section 5(2C) of the Remuneration Tribunal Act 1973. That is, the legislative power of the Remuneration Tribunal is only an advisory power with regard to the annual allowance. After the relevant determinations are tabled, Parliament may resolve to disapprove (disallow) the determinations.

Minister for Employment and Workplace Relations

The Remuneration Tribunal reports on the annual allowance to the Minister for Employment and Workplace Relations. Since the Legislative Instruments Act 2003 came into force on 1 January 2005, all Remuneration Tribunal determinations - as legislative instruments - must be registered on FRLI. The Attorney-General, rather than the portfolio minister, now has responsibility for tabling all legislative instruments in Parliament. Tabling must occur within six days of registration. Schedule 4 of Legislative Instruments Regulations 2004 provides that existing disallowance provisions in the Remuneration Tribunal Act 1973 continue. This means that Parliament may pass a resolution ‘disapproving’ of the determination within 15 sitting days after the determination has been tabled. For further information see Determinations at the Remuneration Tribunal website.

Setting the Annual Allowance: link to the PEO Classification

'Reference salary'

In the Report on Senators and Members of Parliament, Ministers and Holders of Parliamentary Office - Salaries and Allowances for Expenses of Office: Report 1999/01, the Remuneration Tribunal recommended that the annual allowance of parliamentarians be linked to a 'reference salary' in a Principal Executive Office (PEO) Classification. The Government accepted this recommendation and Parliament passed Regulations under the Remuneration and Allowances Act 1990 to describe the link between the annual allowance and the reference salary in the PEO classification structure. The Remuneration Tribunal Act 1973 ss. 5(2A)(a) allows the Remuneration Tribunal to establish the PEO Classification structure by determination.
The relevant determination is Remuneration Tribunal Determination 2005/19 - Principal Executive Office - Classification Structure and Terms and Conditions A list of Principal Executive Offices can be found on the Remuneration Tribunal's website.

Pay freeze from 1 July 2008 and “for each subsequent financial year”.

In its Statement on the 2008 Review of Remuneration for Holders of Public Office, the Remuneration Tribunal indicated that Reference Salary A would increase by 4.3 per cent from 1 July 2008. A new Reference Salary A of $132,530 was determined with the Tribunal's amending Determination 2008/10 - an increase of 4.3 per cent from 1 July 2008. Regulation 5 then effectively reduced Reference Salary A by the same percentage for the purposes of the annual allowance.

What is the Annual Allowance from 1 July 2008?

The annual allowance for parliamentarians is $127 060 per annum from 1 July 2008.

Subsequent financial years

Reference Salary A - considerations and adjustments

It is useful to understand how adjustments are made to Reference Salary A (and therefore to the annual allowance).

As described above, Parliament has accepted the PEO Reference Salary A linkage to the annual allowance. The PEO Classification, including Reference Salary A, is reviewed in July each year.

The Remuneration Tribunal Act 1973, the Remuneration and Allowances Act 1990 and associated regulations do not require the Remuneration Tribunal to review the Principal Executive Office Classification on an annual basis. However, footnote 8. to Table A1 in Determination 2005/19 says:

    The Total Remuneration range for each Band is normally adjusted from 1 July each year.

Under the Remuneration Tribunal Act 1973, and as indicated above, the Tribunal has wide scope to consider factors when reviewing the PEO Classification.
The Statement on Principal Executive Office (PEO) Holders: [amending] Determination 2004/15 outlined some of the factors the Tribunal has recently considered when advising on adjustments to the maximum amount listed for each PEO Classification Band. For example, the Statement mentions "key economic indicators" and "specific indicators such as the Wage Cost Index (WCI) series". The WCI series is a product of the Australian Bureau of Statistics.

Report 1999/01 highlights some of the factors given consideration by the Tribunal during earlier deliberations. The Presidential Overview in the Tribunal's 2005-06 Annual Report discusses a range of factors that the Tribunal takes into account when conducting annual reviews of all Offices within its jurisdiction.

Annual Allowance and the States and Territories  

Salary of state and territory parliamentarians

The federal annual allowance provides a linkage to the basic salary ⁽²⁾ of parliamentarians in Queensland, New South Wales, Victoria, South Australia, Tasmania and the Northern Territory. The basic salaries of Western Australian and the Australian Capital Territory parliamentarians are not linked to the annual allowance.

The salaries of state and territory parliamentarians are summarised in the following table. All salaries are as at 1 July 2008 unless described otherwise.

2008 salaries are advisory, please contact each jurisdiction to confirm.

Salary

The Remuneration and Allowances Act 1990 provides a salary to Ministers of State and Parliamentary Office-holders (Section 7). This is sometimes described as an "additional salary."

Ministers of State

The Remuneration Tribunal is empowered, by ss. 6(1) of the Remuneration Tribunal Act 1973, to report on salary for Ministers of State.

Ministerial salary is expressed as a percentage of the annual allowance (basic parliamentary salary). The Tribunal's Report Number 1 of 2008 Report on Ministers of State - Salaries Additional to the Basic Parliamentary Salary confirms the percentage rates that currently apply. They are:

Ministerial salaries have been calculated in the Appendix to this Background Note.

When acting Prime Minister, the Deputy Prime Minister is paid the same rate of salary per annum payable to the Prime Minister.

Note that ministerial salary is ultimately a matter for executive government. The Remuneration Tribunal reports on ministerial salary. Cabinet can vary ministerial salary if it so wishes.

The Ministers of State Act 1952 sets the maximum number of ministers and appropriates monies for payment of ministerial salaries. This Act was amended in 2000 to include Parliamentary Secretaries.

Parliamentary Office-holders

ss.7(1) of the Remuneration Tribunal Act 1973 allows the Tribunal to determine a salary for Parliamentary Office-holders. This sub-section prevails, to the extent of any inconsistency, over Schedule 4 of the Remuneration Allowances Act 1990, Ministers and Office-holders of the Parliament.

Parliamentary Office-holders receive a salary that is also expressed as a percentage of the annual allowance.

Determination 2008/19 Parliamentary Office Holders - Additional Salary is the governing determination from the Remuneration Tribunal. Some offices and salary percentages are:

The remaining offices and percentages can be found in Table 1 of Determination 2008/19.

Salary of Office - states and territories

This table provides current salaries of office (mostly called additional salaries) for State Premiers and Chief Ministers. Most additional salaries are given as a percentage of the state or territory basic salary. As described above, increases to some basic salaries occur through a legislative linkto the federal annual allowance, while others are determined by the relevant state or territory tribunal.

The Total given is current as at 1 July 2008. Total should not be taken as the entire remuneration of Office-holders as it does not include other allowances and benefits payable to each premier and chief minister.

2008 figures should be regarded as advisory - please contact other parliaments to confirm data.

Electorate Allowance  

An Electorate allowance is determined by the Remuneration Tribunal by virtue of ss.7(1) and ss.7(4) of the Remuneration Tribunal Act 1973 and Clause 2 of Schedule 3 of the Remuneration and Allowances Act 1990. It is "an expense of office allowance payable to Senators and Members to reimburse them for costs necessarily incurred in providing services to their constituents" (Report 1999/01). The electorate allowance is treated as taxable income but is not regarded as salary for the purposes of the Parliamentary Contributory Superannuation Act 1948.

Remuneration Tribunal Determination 2006/18 Members of Parliament Entitlements gives the annual rates payable as:

Additional electorate allowance of $19 500 per annum in lieu of private-plated vehicle

When calculating the total remuneration of an individual member, note that the rate of electorate allowance will vary depending upon the size of particular member's electorate and whether the senator or member has elected to take a private-plated vehicle.

Other Benefits  

Entitlements: ANAO report and response

In 2001, by resolution of the Senate, the Australian National Audit Office (ANAO) undertook a performance audit on parliamentary benefits, called entitlements by the Auditor-General. Audit Report No 5 2001-2002 Parliamentarians' Entitlements: 1999-2000, (click here for those outside Parliament House), provides an invaluable overview of the history of, and administrative and legislative framework surrounding, the provision of parliamentary benefits. The Auditor-General makes 28 recommendations to the Presiding Officers that will "improve the administration of Parliamentarians' various entitlements."

The Report states that benefits are "established pursuant to a legal framework comprising the Constitution, Acts of Parliament, determinations of the Remuneration Tribunal, and executive decisions". Benefits are administered by a range of Commonwealth Departments. Ministers are entitled to certain additional benefits, some of which are administered and funded by the Minister's home department. The Chamber Departments and M&PS in the Department of Finance and Deregulation (Finance) have the major role in administration and delivery of entitlements. The Special Minister of State issues procedural rules and guidelines to give full effect to benefits. The Minister's role is set out in various clauses of Remuneration Tribunal Determinations eg Clause 5.3 of Determination 2006/18.

Note that the Auditor-General also calls the framework of benefits "a complex mixture of capped and uncapped entitlements."

In a press release of 27 September 2001, the government responded to the ANAO Report with an announcement of changes to some print and travel arrangements.

ANAO undertook a performance audit of the administration of payments under the Members of Parliament (Staff) Act 1984 by the administering agency, Department of Finance and Deregulation (Finance). Audit Report No. 15 2003-04 was tabled on 1 December 2003 and contained 13 recommendations relating to: personnel administration; authorisations and certifications; the control framework for payments; and payments and services provided to MOP(S) Act staff during election periods. Finance has accepted these recommendations.

A comprehensive discussion of benefits is beyond the scope of this e-brief. It is recommended that the reader consult Audit Report No 5 2001-2002.

Benefits: overview

Parliamentary Entitlements Act 1990 entitles Members of Parliament to benefits listed in Schedule 1 Part 1 of the Act. The Act also allows benefits in the Schedule to be "varied or omitted" by determination of the Remuneration Tribunal or by regulations pursuant to the Act. Where the regulations and determinations are inconsistent, the regulations prevail and the determination is void to the extent of the inconsistency.

Section 7 of the Remuneration Tribunal Act 1973 says that the Tribunal shall "inquire into, and determine" benefits paid to MPs, Office-holders and Ministers.

Reporting

Travel  

Schedule 1 Part 1 of the Parliamentary Entitlements Act 1990 allows certain travel and accommodation to be reimbursed if it is related to "parliamentary or electorate business."

The Remuneration Tribunal determines travel pursuant to ss.7(1) and ss.7(2) of the Remuneration Tribunal Act 1973. The Tribunal refers to a travel allowance rather than benefit or reimbursement and so the first term will be used to avoid confusion.

Determination 2008/15 Members of Parliament - Travelling Allowance specifies the amount payable to Members of Parliament, Office-holders and Ministers, for accommodation during periods of stay away from a home base that is nominated to the Special Minister of State. The conditions of payment and for what purpose travel at government expense can be used, are specified in the Determination. Current travel allowance rates are listed in Part 1 of the Determination.

Determination 2006/18 Members of Parliament Entitlements describes the type of transport and fares allowable.

Overseas travel

There are four entitlements to overseas travel for senators, members and certain office-holders:

1. Travel as a member of a Parliamentary Delegation, within a program approved for each calendar year by the Prime Minister.'
Delegation travel can be undertaken by authority of Schedule 1 of the Parliamentary Entitlements Act 1990. The benefit is also described in regulations pursuant to the Act. The benefit allows the parliamentarian's class of travel to be downgraded to offset the cost of the fare of an accompanying spouse [Schedule 1 Part 1 Item 9 (2)].

2. Travel overseas for the purpose of undertaking studies and investigations of matters related to their duties and responsibilities as a member of parliament'
This benefit is determined by the Remuneration Tribunal in Clause 9 of Determination 2006/18. A parliamentarian becomes eligible when they have completed three years service in parliament. The benefit is limited to one overseas study trip per parliament for the parliamentarian and their spouse and is 'for travel outside the Commonwealth of Australia for the purpose of undertaking studies and investigations of matters related to their duties and responsibilities as a Member of Parliament'. Spouses can now 'join' or 'accompany' parliamentarians travelling overseas for study. Expenditure is capped at the equivalent cost of one first-class around-the-world airfare for a parliamentarian and spouse in the life of each Parliament. The benefit also allows reimbursement of accommodation and subsistence costs actually incurred. Certain other costs are reimbursed, including departure tax, health and baggage insurance and passport fees. A report on the overseas study trip shall be lodged with the Special Minister of State within 30 days of return.

3. Representational overseas travel for parliamentarians who, with the approval of the Prime Minister, are representing Australia, a Minister, or the Government overseas.
The benefit is described by the Parliamentary Entitlements Regulations 1997 as amended, pursuant to the Parliamentary Entitlements Act 1990. The benefit is: the cost of travel overseas at the same standard that would apply to a Minister travelling on official business; and the cost of travel overseas by the Members spouse when accompanying the Member, if the Prime Minister approves; the cost of official hospitality, under the same arrangements that apply to a Minister if the Special Minister of State approves. Certain other costs are reimbursed including vaccinations and medical supplies essential to travel. The use of special purpose aircraft is permitted as approved by Prime Minister. [Statutory Rule no 149 of 2003].

4. Travel overseas on official business for Ministers as approved by the Prime Minister. Travel overseas on official business for the Leader or Deputy Leader of the Opposition in the House of Representatives, or a Presiding Officer. The entitlement is extended, with the approval of the Prime Minister, to a parliamentarian representing these office-holders. Overseas travel on official business is taken under authority of the Schedule 1 of the Parliamentary Entitlements Act 1990.

Reporting

Travel benefit payments for the following categories are tabled in Parliament every six months: Parliamentarians' Travel paid by the Department of Finance and Deregulation; Department of Prime Minister and Cabinet, Expenditure on Travel by Former Governors-General; Former Parliamentarians' Travel paid by the Department of Finance and Deregulation; Department of Finance and Deregulation, Parliamentarians' overseas study tour reports; and Department of Defence, Schedule of Special Purpose Flights.

Former parliamentarians

Parliamentary superannuation, retirement travel and a resettlement allowance are the benefits available to former parliamentarians. Retirement travel consists of the Life Gold Pass and Severance Travel.

The Life Gold Pass benefit is outlined in the provisions of the Members of Parliament (Life Gold Pass) Act 2002. The Life Gold Pass entitles eligible former parliamentarians to travel within Australia for "non-commercial" purposes at government expense.

Qualifying period for the Life Gold Pass is determined by the Remuneration Tribunal in Determination 2006/18 Clause 7.

Severance travel is available for those parliamentarians ineligible for the Life Gold Pass. It allows parliamentarians who do not qualify for a Life Gold Pass to travel domestically at government expense for a limited time. Severance travel, for "non-commercial" purposes only, provides for between 12-25 return trips per annum for up to five years, depending upon length of service.

The Remuneration Tribunal determines both the benefit and qualifying period for Severance travel in Determination 2006/18 Clauses 8.1 - 8.5.

For a fuller description of retirement travel, click here.

Resettlement allowance  

The resettlement allowance is determined by the Remuneration Tribunal in Determination 2006/18 Clauses 8.6 - 8.8.
Eligible senators and members are those who have:
(a) have joined the Parliament at or since the November 2001 election; and
(b) are not able to access a pension or superannuation benefit (related to their service in the Parliament) immediately upon ceasing to be a Member of the Parliament; and
(c) have retired involuntarily through:
(i) electing not to stand for re-election following loss of party endorsement, for reasons other than misconduct;
(ii) defeat at an election (including defeat at an election where he or she has campaigned to be elected to represent a different electoral division or to the other House of Parliament).

The Resettlement Allowance payable to eligible former parliamentarians is equal to 12 weeks of the annual allowance on the date Parliament is prorogued before the election. The annual allowance is referred to as the "basic parliamentary salary" in Determination 2006/18.

For further information, please refer to the 2007 section in the Background Note, The Parliamentary Retiring Allowances Act 1948: Debates, Committee Reports, Remuneration Tribunal Reviews and a Chronology of Legislative Amendments.

Parliamentary superannuation

Existing Legislation, Operation and History

Senators and Members elected at the general election held 9 October 2004 are eligible for benefits under the Parliamentary Superannuation Act 2004.
Parliamentarians serving in Parliament prior to the 2004 general election are, and will remain, eligible for entitlements under the Parliamentary Contributory Superannuation Act 1948 (the principal Act). This Act established the Parliamentary Retiring Allowances Trust and the Parliamentary Superannuation Contributory Scheme (the Scheme). Finance administers the Scheme under the direction of the Trust. A history of the principal Act can be read in the e-brief entitled The Parliamentary Retiring Allowances Act 1948: Debates, Committee Reports, Remuneration Tribunal Reviews and a Chronology of Legislative Amendments.

The Parliamentary Superannuation Handbook, published by Finance, outlines the Scheme's operation.

A detailed examination of the Scheme is beyond the scope of this e-brief. Readers are referred to a companion Background Note, Superannuation benefits for senators and members.

Appendix

Annual allowance, electorate allowance and salaries of Members and Senators, Office-holders of the Parliament and Ministers 1996-2008: worksheet of the annual allowance, additional salaries and electorate allowance calculated for each office.

Endnote

(1) D. Meagher, Section 48 of the Constitution of Australia, in E Law vol 6 no 2, June 1999.

(2) The term basic salary is used in legislation and determinations of all states and the territories but Queensland where the term annual salary is described by the governing legislation. Basic salary is used here for convenience, assisting the delineation between Commonwealth and States.

(3) On 29 May 2004, it was reported that Victorian Premier Steve Bracks had decided not to accept the full increase to Victorian parliamentary salaries that would flow from the 3.9% increase to the federal annual allowance. The Premier indicated that the increase would be capped at 3% in line with the Victorian Government's "strict public sector wages policy of no more than 3 per cent per year". [Age 29 May 2004, p. 9]
The Parliamentary Salaries and Superannuation (Amendment) Act 2004 amended the Parliamentary Salaries and Superannuation Act 1968 so that the Victorian basic salary from 1 July 2004 was defined as $1 442 less (not $500 less) than the annual allowance - $1 442 less than $106 770. This enacted a basic salary for Victorian MPs of $105 328 per annum from 1 July 2004, an increase of 3%. This nexus remained for the 1 July 2005 and 1 July 2006 increases.

On 21 August 2007, the Victorian Parliament passed the Parliamentary Salaries and Superannuation Amendment Act 2007. The purpose of the Act was to "amend the Parliamentary Salaries and Superannuation Act 1968 to limit any increase in the salary payable to members of the Parliament of Victoria in the current financial year to 3.25%" [Section 1 of amending Act]. Section 3 enacts a reduction to the annual allowance of $5 733 from 1 July 2007, rather than $1 442. Therefore the Victorian parliamentary basic salary from 1 July 2007 was $5 733 less than $127 060 i.e. $121 327 per annum. From 1 July 2008, the salary remains at $5 733 less than $127 060 i.e. $121 327.

For copyright reasons some linked items are only available to Members of Parliament.

Comments to: L. Manthorpe

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