RESEARCH PAPER SERIES, 2017–18              10 November 2017

The remuneration of Commonwealth departmental secretaries: 2017 update

Dr Nicholas Horne and Cathy Madden

Politics and Public Administration Section

Introduction

In 2012 new arrangements regarding the remuneration of Commonwealth departmental secretaries came into effect. This paper sets out the revised system. The paper also outlines the separate arrangements for the secretaries of the parliamentary departments, including the Clerk of the Senate and the Clerk of the House of Representatives. Remuneration arrangements for other agency heads (for example heads of statutory authorities) are not covered by this paper.

For the previous arrangements for setting the remuneration of departmental secretaries see the previous version of this paper, The remuneration of Commonwealth departmental secretaries.[1] 

Background—Remuneration Tribunal review of the office of secretary

In 2010–11, the Remuneration Tribunal conducted a review of the office of departmental secretary, which included commissioning a consultant to undertake surveys of the work value and remuneration of the office.[2] In its two reports the Tribunal considered various aspects of secretaries’ roles including classification, remuneration, and work value, and advanced a number of proposals including:

•        preservation of the two-tier remuneration structure for secretaries, with a revised classification of secretary positions between the two tiers and featuring separate, higher levels of remuneration within tier 1 for the Secretary of Department of the Prime Minister and Cabinet (DPMC) (proposed tier 1A) and the Secretary of the Department of the Treasury (Treasury) (proposed tier 1B)

•        three remuneration pay points within the main stratum of tier 1 and within tier 2

•        remuneration of the secretaries of DPMC and Treasury to be determined by the Remuneration Tribunal and remuneration of other secretaries to be determined by the Secretary of DPMC, and

•        the phasing-in of the full remuneration structure by 2014 via staged pay increases.[3]

The Tribunal expressed the view (and had done so previously) that secretaries’ remuneration was inadequate, and identified increased remuneration amounts, both initially and over time, as part of its proposals.[4] The Tribunal noted that the proposed remuneration increases were ‘substantial’, but also stated that:[5]

… Secretaries' remuneration has been well below where it should have been for many years. The Tribunal considers it necessary that the remuneration of Secretaries should now be ‘rebased’ to correct this.[6]

Legal framework for secretaries’ remuneration

In June 2011 the Remuneration and Other Legislation Amendment Act 2011 (ROLA Act) was passed by the Parliament (commenced July 2011).[7] The ROLA Act amended a number of Acts including the Public Service Act 1999 (PS Act) and the Remuneration Tribunal Act 1973 (RT Act) and introduced a new framework for secretaries’ remuneration.[8] The Act also made changes to the remuneration arrangements for other Australian Public Service offices and for parliamentarians.

The current version of section 61 of the PS Act, as amended by the ROLA Act, provides that:

(1) The remuneration of a Secretary is as provided by Division 4 of Part II of the RT Act.

(2) The other terms and conditions applying to the appointment of a Secretary are as determined by the Remuneration Tribunal under Division 4 of Part II of the RT Act.

The provisions of Division 4 of Part II of the RT Act (sections 13–16), as inserted by the ROLA Act, set out the current arrangements for secretaries’ remuneration. Notable features include a requirement for the Remuneration Tribunal to determine a classification structure for secretaries and individual classifications of secretaries, and a division of responsibility between the Tribunal and the Secretary of DPMC in regard to determining remuneration amounts for secretaries. The requirements under Division 4 of Part II are summarised below.

Table 1: Current framework for departmental secretaries’ remuneration under
Division 4 of Part II of the Remuneration Tribunal Act 1973

Decision-maker

Classification of secretaries

Remuneration and related matters

Remuneration Tribunal

•        must determine a classification structure for secretaries and periodically determine secretaries’ classifications within the structure (section 13)

•        may determine any matters that are, or are considered by the Tribunal to be, significantly related to the classification structure (section 13)

•        may hold inquiries for the purpose of performing its functions relating to the classification structure (section 13)

•        must periodically determine remuneration amounts for the secretaries of DPMC and Treasury consistent with the classification structure (section 14)

•        must periodically inquire into and determine the employment terms and conditions (other than remuneration) for secretaries (section 15)

Secretary of DPMC

•        may, after the Remuneration Tribunal first determines secretaries’ classifications, periodically make recommendations to the Tribunal in relation to the classifications of particular secretaries (section 13)

•        must, in consultation with the President of the Remuneration Tribunal and the Australian Public Service Commissioner, periodically assign all departmental secretaries (other than him/herself and the Treasury Secretary) an amount of remuneration consistent with the Remuneration Tribunal classification structure (section 14)

Source: compiled by the Parliamentary Library.

Under section 16 of the RT Act, determinations made by the Tribunal must: be in writing; come into effect on the date specified; and must be gazetted and published on the Tribunal’s website within 14 days after being made. Under section 14, assignments of remuneration to secretaries by the Secretary of DPMC must also be in writing and also come into effect on the date specified.

Initial determination and instrument of assignment—March 2012

In March 2012, the Remuneration Tribunal issued its first determination under the revised framework. The determination established a new classification structure for departmental secretaries, classified secretaries within the two tiers, set total remuneration amounts for the secretaries of DPMC and the Treasury, and set other terms and conditions of employment for all secretaries.[9] Also in March 2012, the remuneration of secretaries other than the secretaries of DPMC and Treasury was determined by the Secretary of DPMC in a separate instrument of assignment.

As foreshadowed in the Remuneration Tribunal’s review, the new classification structure comprised two tiers of remuneration for secretaries including three pay points within tiers 1 and 2 and separate classifications at the top of tier 1 for the Secretary of DPMC (tier 1A) and the Secretary of Treasury (tier 1B) with higher levels of remuneration than in the main stratum of tier 1. This constituted a change to the previous arrangements. Whereas previously the secretaries of DPMC, Treasury and the Department of Defence (Defence) had all received the same level of remuneration, now remuneration for the secretaries of DPMC and Treasury was set on an individual basis and the Secretary of Defence was no longer classed with either of these secretaries but was classified to the broader stratum of tier 1.

In relation to the classification of the Secretary of Defence, the Remuneration Tribunal had previously expressed the view that, given the shared accountability between the Secretary of Defence and the Chief of the Defence Force (CDF), aligning the remuneration of the Defence Secretary and the CDF was appropriate.[10] The Tribunal determines the remuneration of the CDF, which is in line with the remuneration structure of the Secretary of Defence.[11]

Determination and instrument of assignment—June 2013

In June 2013, the Remuneration Tribunal issued a second determination and the Secretary of DPMC issued a second instrument of assignment; both took effect on 1 July 2013 and superseded the March 2012 determination and instrument. The new determination did not alter the classification structure or the classification of individual secretaries that had been set out in the March 2012 determination.

Under the Remuneration Tribunal determination, the base salary is 70 per cent of total remuneration.[12]

The Secretary of DPMC’s instrument of assignment stated that, in setting the remuneration amounts for secretaries in tiers 1 and 2, several factors relating to ‘the size and scope of each of the Offices of Secretary’ were taken into account including:

•        ‘the diversity and complexity of the functions and policy responsibilities in the portfolio’

•        ‘the scale of the Department’s activities including its human, financial and material resources’, and

•        ‘the geographic spread of the Department and whether the Department has responsibility for issues which impact across government’.[13]

The Secretary of DPMC stated that the setting of remuneration amounts was ‘not based on the performance of individual Secretaries’.[14] The factors listed above have been used for the setting of subsequent instruments of assignments.

Determination and instrument of assignment—2014

The Tribunal decided to determine no annual adjustment to remuneration for offices in its jurisdiction from 1 July 2014. In addition, it decided to defer the final remuneration increases for a number of offices that had been subject to comprehensive and detailed review by the Tribunal, resulting in significant overall increases, that had been phased in over the preceding years. This impacted secretaries, the Specified Statutory Offices (SSOs), and a number of full time offices that were granted remuneration increases as a result of the Tribunal’s major reviews, completed in 2011 and 2012.[15]

In 2014 the Tribunal issued a consolidated determination on Departmental Secretaries - classification structure and terms and conditions.[16]

The Secretary of the DPMC issued an instrument of assignment on 1 July 2014.

Determination—March 2015

On 31 March 2015 the Tribunal issued a statement deferring its decision on any increases to annual adjustment to offices in its jurisdiction until the latter half of 2015.[17] A Determination was issued to give effect to the Tribunal’s decision that made no annual adjustment to the remuneration for offices in its jurisdiction.[18] As a result, remuneration levels remained at the 1 July 2014 level. The Appendix indicates the classifications, pay points, and actual total remuneration amounts; the pay points and remuneration amounts include specified six-monthly increases through to December 2015.

Determination and instrument of assignment—December 2015

In December 2015 the Tribunal issued Determination 2015/16: Departmental Secretaries - classification structure and terms and conditions, which provided for an increase in remuneration of two per cent for departmental secretaries effective from 1 January 2016.[19] Part of the reasoning for the Determination was that the Tribunal was concerned that remuneration for secretaries, SSOs and a number of full time offices did not once again decline relative to other public and private sector office holders.[20]

The Secretary of DPMC issued an instrument of assignment on 23 December 2015, based on the same factors as previous instruments, with effect from 1 January 2016.[21]

Determination—December 2016

On 7 December 2016 the Remuneration Tribunal issued Determination 2016/13: Departmental secretaries–classification structure and terms and conditions.[22] The Determination took effect from 8 December 2016. The Tribunal did not change the salary levels from the 2015 determination.

Current determination—June 2017

On 22 June 2017 the Remuneration Tribunal issued Determination 2017/06: Departmental secretaries–classification structure and terms and conditions, which provided for a two per cent increase in remuneration for departmental secretaries.[23] The Determination took effect from 1 July 2017.

Table 2: Current classification structure and total remuneration for specified pay points

Level

Pay point

1 July 2017

Department

Level 1A

–

$878,940

Prime Minister and Cabinet

Level 1B

–

$857,630

Treasury

Level 1

1

$831,000

Defence; Foreign Affairs and Trade

2

$788,380

Finance; Health and Ageing

3

$745,770

Social Services; Industry, Innovation and Science; Human Services

Level 2

1

$745,770

Attorney-General’s; Education and Training; Immigration and Border Protection

2

$719,140

Agriculture and Water Resources; Employment; Communications and the Arts; Environment; Infrastructure and Regional Development

3

$692,500

Veterans’ Affairs

Source: Remuneration Tribunal Determination 2017/06 and Secretary, Department of the Prime Minister and Cabinet, Remuneration Tribunal Act 1973 Instrument of Assignment under section 14(3), 23 December 2015.

Parliamentary departmental secretaries

Part 7 of the Parliamentary Services Act 1999 (the Act) sets out the appointment and terms and conditions for secretaries of the four parliamentary departments: the Clerk of the Senate, the Clerk of the House of Representatives, the Secretary of the Department of Parliamentary Services and the Parliamentary Budget Officer. The terms and conditions of employment of a secretary (other than the Parliamentary Budget Officer) as set by the Presiding Officers are provided under section 63 of the Act:

63  Terms and conditions of appointment

(1)  The terms and conditions of appointment of the Secretary of a Department are as determined by the Presiding Officers.

(2)  For each determination, the Presiding Officers must seek the advice of the Remuneration Tribunal and take that advice into account.

(3)  Each determination must be:

(a)  published in the Gazette within 14 days; and

(b)  laid before the appropriate House of the Parliament as soon as practicable; after the determination is made.

(4)  In this section, appropriate House means:

(a)  in relation to a determination relating to the Clerk of the Senate—the Senate; or

(b)  in relation to a determination relating to the Clerk of the House of Representatives—the House of Representatives; or

(c)  in relation to a determination relating to any other Secretary—the Senate and the House of Representatives.

Under section 64X of the Act the Parliamentary Budget Officer is appointed by the Presiding Officers,  with the appointment approved by the Joint Standing Committee on Public Accounts and Audit (section 64XA) and remuneration determined by the Remuneration Tribunal (section 64XB).

Under the Act the Tribunal provides advice to the Presiding Officers in relation to the terms and conditions of the Parliamentary Librarian and the heads of the parliamentary departments.[24]

In October 2012 the Presiding Officers agreed with the President of the Remuneration Tribunal that the responsibility they presently have for determining the remuneration of parliamentary service statutory office holders should move to the Remuneration Tribunal.[25] This followed the changes in 2011 for the setting of remuneration and terms and conditions for certain Australian Public Service secretaries as discussed earlier in the paper. A similar move for the parliamentary service office holders would require legislative change. However this legislative change has not been acted upon.

Table 3: Current remuneration of parliamentary departmental secretaries

Secretary

Total annual remuneration

Date of Effect

Department of the House of Representatives

Department of Senate

Department of Parliamentary Services

$426,160[26]

$417,800[27]

$426,160[28]

1 July 2017

1 January 2016

1 July 2017

Parliamentary Budget Officer

$426,160[29]

1 July 2017

Source: compiled by the Parliamentary Library

Conclusion

The 2011 amendments to the Remuneration Tribunal Act changed longstanding arrangements for the setting of secretaries’ remuneration and other conditions of employment. Under the amendments the Remuneration Tribunal and the Secretary of the Department of Prime Minister and Cabinet have joint responsibility for determining secretaries’ remuneration, and the Tribunal also determines a classification structure for secretaries and other conditions of employment. The Tribunal took the opportunity to recast the classification of secretaries for remuneration purposes and to significantly increase secretaries’ remuneration profile. The setting of remuneration and conditions for the secretaries of the parliamentary departments remains separate from that framework.

Appendix: Classification structure and total remuneration amounts for all departmental secretaries (effective 1 July 2013 until 31 December 2015)

Total remuneration

Tier

Departmental secretary

Pay point

1 July 2013

1 Jan 2014

1 July 2014

1A

Prime Minister and Cabinet

—

$760,840

$802,820

$844,800

1B

Treasury

—

$746,500

$785,410

$824,320

1

Defence

1

$730,120

$764,420

$798,720

Education, Employment and Workplace Relations

Finance and Deregulation

Foreign Affairs and Trade

Health and Ageing

2

$709,640

$737,800

$757,760

Families, Housing, Community Services and Indigenous Affairs

Human Services

3

$680,960

$698,880

$716,800

2

Attorney-General’s

Immigration and Citizenship

Industry, Innovation, Climate Change, Science, Research and Tertiary Education

1

$665,600

$691,200

$716,800

Agriculture, Fisheries and Forestry

Broadband, Communications and the Digital Economy

Sustainability, Environment, Water, Population and Communities

2

$649,220

$670,210

$691,200

Infrastructure and Transport

Regional Australia, Local Government, Arts and Sport

Resources, Energy and Tourism

Veterans’ Affairs

3

$632,840

$649,220

$665,600

Sources: Remuneration Tribunal, Determination 2013/14: departmental secretaries—classification structure and terms and conditions, Remuneration Tribunal, Canberra, 2013, p. 3; DPMC, Remuneration Tribunal Act 1973: instrument of assignment under section 14(3), DPMC, Canberra, 2013, pp. 1–2.

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[1].               N Horne, The remuneration of Commonwealth departmental secretaries, Research paper, 2013–14, Parliamentary Library, Canberra, 2013.

[2].               The review documentation can be accessed on the Remuneration Tribunal website ‘Tribunal Statements’.

[3].               Remuneration Tribunal, Review of the office of secretary: report—part I, op. cit., pp. ii–iii; Remuneration Tribunal, Review of the office of secretary: report—part II, Remuneration Tribunal, Canberra, December 2011, pp. i–iii, 25–26.

[4].               Remuneration Tribunal, Review of the office of secretary: Report—Part II, ibid., pp. 18–28.

[5].               Ibid., preface p. 1.

[6].               Ibid.

[7].               See Remuneration and Other Legislation Amendment Act 2011 (ROLA Act).

[8].               Upon introduction of the ROLA Bill in Parliament the Government indicated that the new remuneration framework for secretaries and other APS offices was in fulfilment of a 2007 Australian Labor Party (ALP) election commitment. See G Gray (Special Minister of State and Special Minister of State for the Public Service and Integrity), ‘Second reading speech: Remuneration and Other Legislation Amendment Bill 2011’, House of Representatives, Debates, 24 March 2011, pp. 3156–59. See also ALP, National platform and constitution 2007, ALP, Canberra, 2007, p. 185.

[9].               Remuneration Tribunal, Determination 2012/06: departmental secretaries—classification structure and terms and conditions, Remuneration Tribunal, Canberra, 2012.

[10].               Remuneration Tribunal, Review of the office of secretary: report—part II, op. cit., p. 26.

[11].               See Remuneration Tribunal, Determination 2013/08: specified statutory offices—remuneration and allowances, Remuneration Tribunal, Canberra, 2013, p. 5.

[12].               Remuneration Tribunal, Determination 2013/14: departmental secretaries—classification structure and terms and conditions, Remuneration Tribunal, Canberra, 2013, p. 2.

[13].               Department of the Prime Minister and Cabinet (DPMC), Remuneration Tribunal Act 1973: instrument of assignment under section 14(3), DPMC, Canberra, 2013, p. 1.

[14].               Ibid.

[15].               Remuneration Tribunal, 2014 Review of remuneration for holders of public office, Statement, 12 May 2014, Remuneration Tribunal, Canberra, 2014.

[16].               Remuneration Tribunal, Determination 2014/11: Departmental secretaries–classification structure and terms and conditions, Remuneration Tribunal, Canberra, 2014.

[17].               Remuneration Tribunal, 2015 Review of remuneration for holders of public office, Statement, 31 March 2015, Remuneration Tribunal, Canberra, 2015.

[18].               Remuneration Tribunal, Determination 2015/04 Departmental secretaries–classification structure and terms and conditions, Remuneration Tribunal, Canberra, 2015.

[19].               Remuneration Tribunal, Determination 2015/16 Departmental Secretaries–Classification Structure and Terms and Conditions, Remuneration Tribunal, Canberra, 9 December 2015.

[20].               Remuneration Tribunal, 2015 Review of Remuneration for Holders of Public Office Second Statement, Remuneration Tribunal, Canberra, 9 December 2015.

[21].               Department of the Prime Minister and Cabinet, Remuneration Tribunal Act 1973 Instrument of Assignment under section 14(3), DPMC, 23 December 2015.

[22].               Remuneration Tribunal, Determination 2016/13: Departmental secretaries–classification structure and terms and conditions, Remuneration Tribunal, Canberra, 7 December 2016.

[23].               Remuneration Tribunal, Determination 2017/06: Departmental secretaries–classification structure and terms and conditions, Remuneration Tribunal, Canberra, 28 June 2017.

[24].               Parliamentary Service Act 1999, ss. 38E(2), 63(2).

[25].               Parliamentary Service Commissioner, Annual report 2013–14, The Australian Public Service Commission, Canberra, 2014.

[26].               T Smith (Speaker of the House of Representatives), Parliamentary Service (Remuneration) Amendment (Clerk of the House of Representatives) Determination 2017, 6 July 2017, Gazette, 25 July 2017.

[27].               S Parry (President of the Senate), Parliamentary Service (Remuneration) Amendment (Clerk of the Senate) Determination 2016, 2 February 2016, Gazette, 5 February 2016. At the time of publication a new Determination had not been listed on the Federal Register of Legislation.

[28].               S Parry and T Smith, Parliamentary Service (Remuneration) Amendment (Secretary, Department of Parliamentary Services) Determination 2017, 20 July 2017, Gazette, 31 July 2017. The base salary for the Secretary, Department of Parliamentary Service is $298,309 per annum.

[29].               Remuneration Tribunal, Determination 2017/11 Remuneration and Allowances for Holders of Full-Time Public Office, The Tribunal, Canberra, 2017.