Index

Background Paper 7 1997-98
Remuneration of Members of the Parliament of Australia

Margaret Healy
Politics and Public Administration Group
Geoff Winter
Statistics Group
17 November 1997

Contents

Members' remuneration

Constitutional and legal basis of payment

Brief history

Ministerial salaries

Parliamentary Secretaries

Other parliamentary entitlements

Parliamentary superannuation

Endnotes

Appendix

Salaries, etc. of Members of Parliament, Office-Holders of the Parliament and Ministers, 1996

Introduction

This paper contains the latest available information on the salaries of Members of Parliament (MPs), Ministers and all Office holders of the Parliament for 1996 and 1997. It is proposed to update this information whenever salary adjustments are made. The constitutional authority for payment of Members of Parliament and of Ministers is given, along with a short history. There is a brief outline of the other entitlements of Members of Parliament, and of the Parliamentary Contributory Superannuation Scheme.

Members' remuneration

There are several components of the total monetary remuneration of Members of Parliament:

• the basic salary

• the electorate allowance

• office-holder or ministerial salary

As the electorate allowance is a variable component, the electorate size needs to be known when determining the total remuneration for any MP.

The Appendix shows each component separately and provides their combined total. The bolded total is that of the incumbent recipient.

Constitutional and legal basis of payment

Payment of Members and Senators of the Commonwealth Parliament is provided for in section 48 of the Constitution, which states:

Brief history

Until 1973 Parliament itself determined the salaries of its members by legislation, either on the basis of decisions made by the government of the day, or as a consequence of recommendations of various committees of inquiry(1). Table One lists these acts of Parliament and the salary levels they set.

Table 1: Salaries of Members of Parliament determined by Act of Parliament

1901-73

The remuneration of Members of Parliament has always been a contentious issue. The last government-appointed inquiry into parliamentary remuneration, the Kerr Committee, which reported in 1971, recommended that parliamentary salaries should be determined by an independent tribunal. This was accepted by the Whitlam ALP Government, which passed the Remuneration Tribunal Act 1973. This established an independent Remuneration Tribunal which had the function of reporting into and determining the salaries and allowances of Members and Senators, and the allowances of Ministers and Office-holders of the Parliament. This was required to be done at intervals of not more than one year.

Such salaries and allowances were set by means of formal determinations by the Tribunal. The Tribunal is required to furnish the Minister with a copy of each Determination, and the Minister (now the Minister for Finance and Administration) is required to table determinations in each House of the Parliament. Unless specifically disallowed by either House of the Parliament, determinations came into effect on the date specified in the Determination.

It was intended that the work of the Remuneration Tribunal would de-politicise the issue of parliamentary remuneration and conditions.

The Tribunal fixed the basic parliamentary salary, electorate allowances, travel entitlements and conditions for Members and Senators, Office-holders of the Parliament, and Ministers. Some office facilities, such as postage and telephones, were determined by the Tribunal, but the general provision and equipment of electorate offices and the staffing levels for Members and Senators, Office-holders and Ministers was, and still is, set by the Government.

By 1990 parliamentary remuneration had again become a contentious issue. The 1988 Review of the Tribunal determined, after a work value assessment of Members of Parliament by management consultants Cullen Egan Dell, that there should be a substantial phased increase in salaries. However, following strong representations by the Government, the 1990 increase was deferred. The Government proposed a linkage between the salaries of members and those of the Band 1 of the Senior Executive Service (SES) of the Australian Public Service. The Tribunal opposed this linkage. The Hawke ALP Government then passed the Remuneration and Allowances Act 1990, which removed the power of the Remuneration Tribunal to determine the basic salary, and provided for a phased increase of salaries up to the level of SES Band 1. The Act provided that once salaries reached this level, subsequent adjustment of parliamentary salaries would occur in accordance with any adjustments made to SES Band 1 salaries. Since 1990 these adjustments have occurred by means of wage agreements between the government and the public sector unions.

The Remuneration Tribunal continues to make determinations on electorate and other allowances and conditions, and continues to determine the salaries of Office-holders of the Parliament. Determinations fixing the remuneration of Office-holders of the Parliament have updated and rationalised the additional salaries paid to the Chairs of Parliamentary Committees. After the establishment of the Main Committee of the House of Representatives in February 1994, and of the new Senate Committee structure in October 1994, new Offices were approved, including an increased number of Whip positions and the position of Second Deputy Speaker.

Schedule 2 of the Industrial Relations Legislation Amendment Act (No. 2) 1994 (which deals primarily with the coal industry) amended Schedule 3 of the Remuneration and Allowances Act 1990 to provide that the salary of MPs will be equivalent to the minimum payable to a Band 2 level of the SES. The new subclauses of Schedule 3 provide:

Schedule 2 also amended Schedule 4 of the Remuneration and Allowances Act 1990 to provide that whenever parliamentary salaries increase because of an increase to the minimum SES level, the additional salaries paid to Office-holders of the Parliament also increase by the same proportion.

After basic salaries reached SES salary levels, there were adjustments resulting from National Wage Case decisions, and then from the Agreement between the Government and the public sector unions Improving productivity, jobs and pay in the Australian Public Service 1992-1994, and its successor agreements. The last Agreement, Continuous improvement in the Australian Public Service Enterprise Agreement 1995-96, expired at the end of 1996, with the last adjustment taking effect from 17 October 1996.

With the final adjustment made, and the expiry of the Continuous improvement Agreement, it appears that there is now no procedure by which increases to parliamentary salaries can be made, although the remuneration and conditions as specified in the last Agreement remain in force until replaced by a subsequent Agreement. Since the enactment of the Workplace Relations Act 1996, SES salaries and remuneration may be set either through individually negotiated Australian Workplace Agreements (AWA), or they may be included in separate agency enterprise bargaining agreements. The party to any Australian Workplace Agreement may not be disclosed by the Industrial Registrar (although it is possible for an individual who is party to an AWA to disclose its terms). The salient point is that with the move to agency bargaining in the APS, the nexus to parliamentarians' salaries has been broken, and there is now no common public sector standard by which to determine future parliamentary salary levels. It appears that legislation would be required to set another mechanism in place. The Remuneration Tribunal, in its Statement on Members of Parliament - Allowances and Entitlements, dated 8 October 1997, has also drawn attention to this lack of an adjustment mechanism, and recommended that this be given early attention. Any action to re-establish a salary adjustment mechanism would bring the issue of parliamentary remuneration back onto the public agenda, when the point of tying parliamentary salaries to SES salaries was precisely to de-politicise the issue.

It should be noted that State parliamentary salaries are also affected, as generally the States set their parliamentary salaries by legislation with reference to the rate of Commonwealth salaries. In New South Wales, Victoria, and Queensland salaries are set at $500 per annum less than the basic Commonwealth parliamentary salary. South Australia's rate is set at $2000 per annum less, and Tasmania's is 85.19 per cent of the Commonwealth rate. The Northern Territory rate is set by legislation at $3000 per annum less than the Commonwealth rate. Western Australian salaries are set by the Salaries and Allowances Tribunal, which reviews salaries and allowances annually. The Australian Capital Territory, which formerly had remuneration for its Legislative Assembly set by the Commonwealth Remuneration Tribunal, has now established its own Remuneration Tribunal.

Ministerial salaries

Section 66 of the Constitution provides that:

Parliament provided otherwise by enacting the Ministers of State Act 1952 as amended, which fixes the maximum size of the Ministry and appropriates an annual sum for the payment of Ministerial salaries. After 1973, ministerial salaries (which are additional to the salaries of Members and Senators) were set by means of the Government accepting reports of the Remuneration Tribunal. Sub-section 6 (1) of the Remuneration Tribunal Act 1973 provides:

When the Parliamentary Allowances Act 1990 was passed, the Government decided to increase Ministerial salaries by the same percentage as any increases made to the basic salary of Members, and to apply any such increases with effect from the same dates(2).

The Remuneration Tribunal continues to make Determinations on the allowances and entitlements of Members, Senators, Office-holders, and Ministers, and on additional salaries of Office-holders as specified in sub-section 8(2) of the Remuneration Tribunal Act 1973.

The Howard Government soon after its election decided upon a two-tiered pay structure for the Ministry Cabinet Ministers' salaries remained unchanged, but those of Ministers not in the Cabinet decreased by $10 000 per annum(3). This was to reflect the higher workload of Cabinet Ministers, and represented a return to previous Coalition practice. This decision was formalised firstly by the Remuneration Tribunal accepting the advice of the Minister for Industrial Relations in his letter of 18 April 1996 that there should be a salary differential of 20 per cent between the salaries of Cabinet Ministers and other Ministers(4), and secondly by the acceptance of the Tribunal's Report by the Government. The new salary structure came into effect from 7 March 1996.

Parliamentary Secretaries

Parliamentary Secretaries may not receive additional remuneration, but do get reimbursement for 'expenses of office reasonably and necessarily incurred'. Determination No. 16 of 1993, dated 21.12.1993, set the amount at $7 220 per annum.

Other parliamentary entitlements

In addition to the provision of a privately-plated Commonwealth vehicle(5), and electorate allowances, Members and Senators are provided with electorate offices, and may engage three electorate staff, one of whom may be located in Parliament House. They are entitled to transport, travelling allowances which include accommodation, and telephone and postage allowances.

Details of these entitlements and facilities are contained in various Remuneration Tribunal Determinations, and in a booklet published in 1996 by the (former)(6) Department of Administrative Services(7). Another booklet published by the Department of the House of Representatives(8) describes the entitlements and sets out the various services and facilities provided by the Parliamentary Departments.

Non-salary entitlements of Members and Senators are authorised by the Parliamentary Entitlements Act 1990, and by determinations of the Remuneration Tribunal.

Members and Senators travelling within Australia by air, rail or coach on parliamentary or electorate business are transported at the expense of the Commonwealth. So too are Ministers and Office-holders travelling on official business. Travelling allowances are payable for overnight stays for the sittings of Parliament, parliamentary and electorate business and other specified purposes. The latest Determination covering travelling allowances is Determination No. 21 of 1995.

Electorate allowances, spouses', nominees' and dependent children's transport, car transport on parliamentary business, private vehicle allowances, provision of privately-plated Commonwealth vehicles, charter aircraft and drive-yourself vehicles, life gold passes, overseas travel, telephone services and postage are covered by Determination No. 22 of 1995.

The electorate allowance is taxable unless it can be shown that the expenditure was tax deductible. Any balance not accounted for is liable to income tax.

The Commonwealth meets fringe benefits tax payable on the provision of privately-plated Commonwealth vehicles and on entertainment allowances.

Parliamentary superannuation

There is a parliamentary superannuation scheme established by the Parliamentary Contributory Superannuation Act 1948. This is administered by the Department of Finance and Administration under the direction of the Parliamentary Retirement Allowances Trust. The Minister for Finance and Administration is the presiding trustee. The Department of Finance and Administration issues an explanatory booklet on the scheme to Members and Senators entitled the Parliamentary Contributory Superannuation Handbook, which is updated as required. Contributions are 11.5 per cent of monthly salary and additional salary of office for the first 18 years of parliamentary service. After this the contribution rate falls to 5.75 per cent. The Parliamentary Contributory Superannuation Scheme was reviewed by the Senate Select Committee on Superannuation, which reported in September 1997(9).

Endnotes

1. There have been four such committees of inquiry, in 1952, 1955, 1959 and 1971. They were:

Australia. Committee of Inquiry into the Salaries and Allowances of Members of the National Parliament. Report. Chairman: H S Nicholas. Canberra: Commonwealth Government Printer, 1952.

Australia. Committee of Inquiry into the Salaries and Allowances of Members of the Commonwealth Parliament. Report. Chairman: H F Richardson. Canberra: Commonwealth Government Printer, 1956. PP 7/1956/57.

Australia. Committee of Inquiry into the Salaries and Allowances of the Commonwealth Parliament. Report. Chairman: H F Richardson. Canberra: Commonwealth Government Printer, 1969. PP 15/1959-60.

Australia. Inquiry into the Salaries and Allowances of Members of the Commonwealth Parliament. Report of Inquiry by Mr Justice Kerr. Canberra: AGPS, 1971. PP 284/1971.

2. This decision was not given separate legislative effect, as authority exists under the Ministers of State Act 1952.
3. Michelle Grattan, in The Age of 16 April 1996, reported the salary differential. She said junior (ie. non Cabinet Ministers) had been told about a fortnight previously that their salaries would fall by $10 000. See also article by Peter Cole-Adams in The Canberra Times, 17 April 1996.
4. Report No. 1 of 1996 dated 14.5.96.
5. Provision of a privately plated Commonwealth vehicle was first made by Determination No. 24 of 1990. A deduction of $6 000 per annum from the electorate allowance was required. This was changed by Determination No. 18 of 1993, and is now covered by Determination 22 of 1995, which made the contribution by parliamentarians the same rate and under the same conditions as those applying to members of the SES. There is a deduction of between $500-700 per annum made from salary.
6. The adminstration of parliamentary and ministerial entitlements and facilities formerly performed by the Department of Adminstrative Services (DAS) was transferred from DAS when it was abolished on 9 October 1997 to the new Department of Finance and Administration.
7. Department of Administrative Services. Senators and Members entitlements. Canberra: Department of Administrative Services, 1996.
8. Department of the House of Representatives. Members' Handbook. Canberra: Department of the House of Representatives, 1996
9. Australia. Parliament. Senate Select Committee on Superannuation. The Parliamentary Contributory Superannuation Scheme and the Judges Pension Scheme. Canberra: The Department of the Senate, 1997.