2017 Parliamentary remuneration and business resources: a quick guide

14 August 2017

PDF version [285KB]

Cathy Madden and Deirdre McKeown
Politics and Public Administration

Introduction

In 2017 the Turnbull Government introduced the most extensive changes to parliamentary entitlements since the current system commenced in 1990.

This quick guide:

  • provides a brief overview of the legislative and administrative changes to parliamentary business resources (as they are now known)
  • updates Parliamentary Library information showing the total remuneration of members of Parliament, ministers and parliamentary office holders following the Remuneration Tribunal’s decision to grant MPs a two per cent pay rise from 1 July 2017 and
  • provides links to relevant resources, including Bills Digests and other relevant Parliamentary Library publications, Bill homepages and Acts.

The Parliamentary Business Resources Act 2017 and the Independent Parliamentary Expenses Authority Act 2017 together provide an overarching framework for MPs’ business resources, but much of the detail will be outlined in determinations and regulations. This includes issues such as: what activities are included under parliamentary business, travel expenses, travel allowances and work expenses; what public resources may be available; what an MP has to provide in claiming public resources; and which office holders are eligible for office holder salary.

A more detailed paper on the administration of, and legislative changes to, parliamentary remuneration and business resources will be forthcoming.

Establishment of the Independent Parliamentary Expenses Authority

On 13 January 2017 the Prime Minister, Malcolm Turnbull, announced the establishment of an Independent Parliamentary Entitlements Authority (IPEA). He indicated that the United Kingdom’s (UK) approach would provide the model for the new independent authority. The announcement came in response to a controversy over MPs’ travel entitlements that culminated in the resignation of the then Minister for Health, Sussan Ley, from that position.

As is discussed in a separate Parliamentary Library FlagPost on the role and powers of the UK Independent Parliamentary Standards Authority (IPSA), not only are the expenses schemes in Australia and the UK very different, but ‘the UK IPSA model operates within a stronger integrity regime in the UK Parliament—including a Parliamentary Commissioner for Standards and codes of conduct for MPs—than that currently operating in the federal Parliament’.

The Prime Minister introduced the Independent Parliamentary Expenses Authority Bill 2017 on 9 February 2017, and it was passed by both Houses of Parliament the same month. The Independent Parliamentary Expenses Authority Act 2017 established the IPEA as an independent statutory authority. The Act includes provision for the establishment by Executive Order of an interim advisory body, governed by a board which would transition to the IPEA when it commenced operation on 1 July 2017. The IPEA’s responsibilities include advising on, administering, and reporting on the work resources and travel resources (travel expenses and travel allowances) of members of parliament. The functions remaining with the Department of Finance (DoF) are described in the relevant DoF circular as office accommodation and advice on and administration of non-travel related expenses.

From 1 July 2017, the IPEA has been established as a Commonwealth statutory authority. Ms Jillian Segal has been appointed Chair of the IPEA. Other members of the IPEA are Mr John Conde (President of the Remuneration Tribunal); Mr Gary Gray; Dr Julianne Jaques and Mr Jeffrey Spender.

A Parliamentary Library publication on the IPEA legislation noted that the administration of federal MPs’ pay and business resources will now involve the IPEA, the DoF, and the Remuneration Tribunal (which will continue to determine MP’s pay and work expenses), and further noted that it was not yet clear how the IPEA and the DoF would interact.

A June 2017 article raised related concerns, suggesting:

There is already considerable scepticism about the new agency and what administrative reality will emerge in the months and years to come. If IPEA simply adds another layer of legitimacy to devious travel expenses that still don’t sound right when people read about them in the news, it will have achieved little.

The article includes points made by Andrew McDonald, the head of the UK’s IPSA from 2009 to 2014, who suggested that the ‘IPEA’s independence is weakened by the fact it sits within the Department of Finance and will be funded like any other public service agency’. In addition McDonald noted that, with the IPEA’s focus on travel expenses, it is entering ‘a crowded landscape’ with some functions staying with Finance, the minister, and the Remuneration Tribunal.

Changes to the Life Gold Pass

The Government introduced the Parliamentary Entitlements Legislation Amendment Bill 2017 on 9 February 2017, and it was passed by both Houses of Parliament the same month. The Parliamentary Entitlements Legislation Amendment Act 2017 ended access to the Life Gold Pass scheme other than for former Prime Ministers and their spouses or de facto partners. The Life Gold Pass scheme (now titled Parliamentary Retirement Travel by virtue of the amending legislation) had provided limited free domestic travel for eligible former members. The Act also imposes penalty loadings when a travel claim is made in excess of the entitlement and strengthens the declaration made by senators and members on travel forms.

Parliamentary business resources

In his second reading speech on the IPEA Bill (discussed above) the Prime Minister foreshadowed that the Government would present ‘a further significant bill’ to the Parliament which would ‘improve the legislative and administrative framework of the ... work expenses framework—further encouraging transparency, accountability and value for money’.

The Parliamentary Business Resources Bill 2017 and the Parliamentary Business Resources (Consequential and Transitional Provisions) Bill 2017 were both introduced into the House of Representatives on 30 March 2017. The Bills were passed by both Houses of Parliament in May 2017 and received Royal Assent on 19 May 2017, but the Acts have not yet commenced.

These Acts will streamline the framework into a single Act—the Parliamentary Business Resources Act 2017 (PBR Act)—rather than the eight that underpin the existing scheme. The Parliamentary Business Resources (Consequential and Transitional Provisions) Act 2017 (PBR (CTP) Act) will repeal the Parliamentary Entitlements Act 1990 and the Parliamentary Allowances Act 1952 and remove from other relevant Acts those provisions relating to members remuneration and work expenses.

The Parliamentary Library’s Bills Digest noted that the legislation implements a principles-based framework that delineates between parliamentarians’ remuneration and work expenses, as recommended by numerous reviews and audits. The PBR Act will:

  • introduce a ‘dominant purpose test’ as a purpose-based eligibility criterion for all work expenses, allowances and other public resources, which means that MPs can only use public resources for the dominant purpose of conducting parliamentary business
  • define ‘parliamentary business’ to include four streams: parliamentary duties, electorate duties, party political duties and official duties
  • provide that MPs have to ensure value for money in incurring expenses or claiming allowances or other public resources and
  • introduce new obligations on MPs to use public resources appropriately, in good faith and ethically, and be accountable for their use. Financial penalties will be able to be imposed for contravention of these legislative requirements.

The PBR (CTP) Act will:

  • make consequential amendments to the legislation governing the IPEA to provide an additional function relating to rulings on travel resources and
  • provide transitional provisions to facilitate the move from the existing scheme to the new scheme.

Former head of the UK IPSA, Andrew McDonald, has also commented on the dominant purpose test, suggesting that deciding the dominant purpose of travel could be difficult in practice. McDonald also noted that consistency of the IPEA’s rulings could become an issue over time.

As at time of publication of this quick guide, the Acts had not commenced and the regulations that will underpin them had not been promulgated. Until this occurs, the IPEA will continue to operate under the existing entitlements scheme. The PBR Act will commence on the sooner of a day fixed by Proclamation or 20 May 2018.

Parliamentary remuneration

On 22 June 2017 the Remuneration Tribunal announced its decision to increase remuneration by two per cent for public offices in its jurisdiction, with effect from 1 July 2017. This includes the base salary of MPs. In its June 2017 Statement, 2017 Review of remuneration for holders of public office, the Remuneration Tribunal stated that this ‘represents an increase of 1.6 per cent per annum over the 18 months since the last general increase decided by the Tribunal, effective from 1 January 2016’. 

Remuneration Tribunal Determination 2017/12 states that the base salary of an MP will increase from $199,040 to $203,030 per annum from 1 July 2017. The table, Remuneration of members of parliament, parliamentary office holders and ministers of state, updates the base salary for members of parliament, ministers and parliamentary officer holders.

Sources and further reading

All hyperlinks are correct as at August 2017.

Acts and Bill homepages

Parliamentary Library publications

 

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


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