Index

Background Paper 18 1997-98
Remuneration of Members of the Parliament of Australia

Margaret Healy
Politics and Public Administration Group
Geoff Winter
Statistics Group
2 June 1998

Contents

Introduction
Members' remuneration
Constitutional and legal basis of payment
Brief history
Ministerial salaries
Parliamentary Secretaries
Other parliamentary entitlements
Parliamentary superannuation
Endnotes

APPENDIX 2
Senators and Members of the House of Representatives: Basic Salaries and
Electorate Allowances, 1952 to 1997

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 adjustments affecting total remuneration are made. As changes have occurred since the first release of this paper in November 1997, there is a brief summary of the circumstances and contents of the changes. 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.

Appendix 1 shows each component separately and provides their combined total. The bolded amounts are those applying to the incumbent recipients.

Constitutional and legal basis of payment

The payment of Members of Parliament was adopted by the parliaments of the Australian colonies in the late nineteenth century, often after bitter struggles with the upper houses(1). Its purpose was to ensure that membership of Parliament was open to all classes, and not only to the rich.

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(2). Salary adjustments were relatively infrequent. Table 1 lists these Acts of Parliament and the salary levels they set.

Appendix 2 shows basic salaries and electorate allowances from 1952 until the present. Electorate allowances were first introduced by the Parliamentary Allowances Act 1952, which enacted the recommendations of the Nicholas Report. This used four groupings of electorates based on criteria used by the Taxation Commissioner. These groupings were clearly associated with the size of the electorates. The amounts fixed in 1952 were increased by amending acts in 1956, 1959, 1964, 1968, 1970 and 1973(3).

Table 1: Basic 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. Thus after 1973 salaries and allowances were determined by the Remuneration Tribunal.

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 such determinations in each House of the Parliament. Unless specifically disallowed by either House of the Parliament, determinations come 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 were, and still are, 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 (APS). 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 AWA 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 (basic) salaries of Members of the House of Representatives 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(4). This was endorsed by the Remuneration Tribunal in its Report No. 1 of 1996 on Ministers' Additional Salary.

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 decided soon after its election 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(5). 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(6), 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. 3 of 1998, dated 27 January 1998, set the amount at $10 000 per annum, with effect from 1 October 1997. Determination No. 9 of 1998, dated 27 February 1998, amended this determination by setting specific conditions for travelling expenses for parliamentary secretaries.

Other parliamentary entitlements

In addition to the provision of a privately-plated Commonwealth vehicle(7), 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.

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

The Remuneration Tribunal conducted a review of members' entitlements during 1997, so as to provide greater flexibility and a tighter focus on needs(8). As a result a new determination on members' entitlements was made. 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. 1 of 1998, dated 27 January 1998. This increased the electorate allowances by 1.5 per cent with effect from 1 October 1997.

The Statement accompanying Determination No. 1 of 1998 outlines the range of expenses for which the electorate allowance may be used. 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.

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.

Responsibility for the administration of travel allowances was transferred in 1997 from the Departments of the House of Representatives and the Senate to the Department of Finance and Administration.(9) Following controversy in 1997 over the administration and use of travel allowances, the Government gave the Tribunal a reference to review travel allowances. The Tribunal's recommendations were accepted by the Government, and the Tribunal then issued Determination No. 8 of 1998, which took effect from 14 April 1998. In its accompanying Statement the Remuneration Tribunal said:

The text of the relevant Determinations should be consulted for detailed information on entitlements and 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(11).

Endnotes

1. Parliamentary Salaries. Australian Encyclopaedia, vol.7. Second edition, revised. Sydney: The Grolier Society, 1965, pp. 20-22.
2. 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.

3. See Parliamentary Allowances Act 1956, Parliamentary Allowances Act 1959, Parliamentary Allowances Act 1964, Parliamentary Allowances Act 1968, Parliamentary Allowances Act 1970, Remuneration and Allowances Act 1973.
4. This decision was not given separate legislative effect, as authority exists under the Ministers of State Act 1952.
5. Michelle Grattan, in The Age of 16 April 1996, reported the salary differential. She said junior (i.e. 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.
6. Report No. 1 of 1996 dated 14.5.96.
7. Provision of a privately-plated Commonwealth vehicle was first made by Determination No. 24 of 1990. A deduction of $6000 per annum from the electorate allowance was required. This was changed by Determination No. 18 of 1993, so that the contribution by parliamentarians is set at the same rate and conditions as those applying to members of the SES. There is a deduction of $500-700 per annum made from salary. MPs may now be provided with a non-standard vehicle, but the additional cost is deducted from the electorate allowance or charter transport allowance. These provisions are now contained in Determination No. 1 of 1998.
8. Remuneration Tribunal. Statement on Members of Parliament-Remuneration and Allowances, 27 January 1998. See also Determinations 1, 2 and 3 of 1998, dated 27 January 1998.
9. Determination No. 8 of 1997 of 10 July 1997 transferred administrative responsibility from the Presiding Officers of the Parliament to the Minister for Administrative Services. This Determination was suspended by Determination No. 9 dated 15 August 1997, because of legal advice. On 5 September 1997 the President of the Senate advised the Minister for Administrative Services that the Senate had agreed to adopt the new arrangements. Determination No. 11 of 1997 of 25 September re-activated Determination No. 8 of 1997 with effect from 13 September 1997.
10. Remuneration Tribunal. Statement. Members of Parliament-Travelling Allowance. 27 February 1998, p. 1.
11. Australia. Parliament. Senate Select Committee on Superannuation. The Parliamentary Contributory Superannuation Scheme and the Judges' Pension Scheme. Canberra: The Department of the Senate, 1997.

APPENDIX 1

		7.3.1996 (a)	17.10.1996 (a)	1.10.1997 (a)
LEADER OF THE OPPOSITION
Basic salary ($ p.a.)		80 251	81 856	81 856
Salary of office ($ p.a.)		62 282	63 528	63 528
Electorate allowance ($ p.a.)	(1)	25 540	26 076	26 467
	(2)	30 370	31 008	31 473
	(3)	37 035	37 813	38 380
Total remuneration ($ p.a.)	(1)	168 073	171 460	171 851
	(2)	172 903	176 392	176 857
	(3)	179 568	183 197	183 764
PRESIDENT OF THE SENATE
Basic salary ($ p.a.)		80 251	81 856	81 856
Salary of office ($ p.a.)		58 407	59 575	59 575
Electorate allowance ($ p.a.)		25 540	26 076	26 467
Total remuneration ($ p.a.)		164 198	167 507	167 898
SPEAKER OF THE HOUSE OF REPRESENTATIVES
Basic salary ($ p.a.)		80 251	81 856	81 856
Salary of office ($ p.a.)		58 407	59 575	59 575
Electorate allowance ($ p.a.)	(1)	25 540	26 076	26 467
	(2)	30 370	31 008	31 473
	(3)	37 035	37 813	(b)38 380
Total remuneration ($ p.a.)	(1)	164 198	167 507	167 898
	(2)	169 028	172 439	172 904
	(3)	175 693	179 244	(b)179 811
DEPUTY LEADER OF THE OPPOSITION
Basic salary ($ p.a.)		80 251	81 856	81 856
Salary of office ($ p.a.)		40 991	41 811	41 811
Electorate allowance ($ p.a.)	(1)	25 540	26 076	26 467
	(2)	30 370	31 008	31 473
	(3)	37 035	37 813	38 380
Total remuneration ($ p.a.)	(1)	146 782	149 743	150 134
	(2)	151 612	154 675	155 140
	(3)	158 277	161 480	162 047
LEADER OF THE OPPOSITION IN THE SENATE
Basic salary ($ p.a.)		80 251	81 856	81 856
Salary of office ($ p.a.)		40 991	41 811	41 811
Electorate allowance ($ p.a.)		25 540	26 076	26 467
Total remuneration ($ p.a.)		146 782	149 743	150 134