The Australian Greens would like to thank those who made a submission to the inquiry into this bill, and the advice included and expertise reflected in these submissions.
The Australian Greens remain committed to the policy provided for by this bill. Submitters opposing the introduction to a pay cap for senior executives in the public service have failed to adequately address the primary problem that this bill is responding to, namely the widening gap between executive pay and that of ordinary workers.
A cap on executive pay is an unashamedly blunt instrument that responds to the fact that the current market led approach is both inconsistent with the values of the public sector and is implicated in societal wide growth in income inequality.
Professor Andrew Podger AO details the growth in the gap in public sector wages over the past twenty-odd years. However, his recommendations support the existing system of executive pay being set by the Remuneration Tribunal which has contributed to this growing gap.
The CPSU in their submission suggest that removing restrictions of wages bargaining is a better means of addressing wage inequality. While we agree that improved bargaining power for employees is important, it is not the purpose of this bill. Irrespective, the Australian Greens would also like to point out that last year we released a policy to circumvent the failures in the current bargaining system and increase non-executive public sector wages by between 4 per cent and 5 per cent per annum over a five year period. This will both help close the income gap in the public sector and help stimulate a nation-wide increase in wage growth.
Scope of senior executives
The CPSU stated in their submission that:
There seems to be an inconsistent approach to the roles that come within the scope of the Bill. It does not pick up some of the full time offices whose salaries are set by the Remuneration Tribunal that are not principle executive offices for the purposes of the legislation but have equivalent salaries. The outcome of this would be that the Secretary of the Department of Prime Minister and Cabinet would have their salary reduced from $878,940 to around $420,000, yet the APS Commissioner would continue to be paid $692,500 and the Chair of APRA would continue to receive $852,310.
The intention of the Bill is for all senior employees of all Commonwealth entities and wholly-owned Commonwealth companies to be subject to pay caps. To avoid any doubt, subsections 72B(2) and 93A(2) of the Bill should be amended as necessary to make clear that this is the scope of covered positions.
Recommendation 1
The scope of ‘senior executives’ include all senior employees of all Commonwealth entities covered by the Public Governance, Performance and Accountability Act 2013.
Reporting of incentive payments
Professor Reza Monem stated in his submission that:
If senior executives are paid a performance bonus or other incentive-based remuneration, then the incentive schemes and the basis for payment under those schemes should be reported. At the same time, the total remuneration should show a breakdown of each category of remuneration (fixed or variable, at-risk, short-term or long-term, superannuation, benefits in kind, etc.).
If a Commonwealth entity is service-focused, then any incentive-based remuneration should be linked to the KPIs of the entity. Specifically, disclosures must be made of the KPIs for senior executives, how they are measured and how the pay is related to any or some of the KPIs.
The Australian Greens accept this recommendation. Sections 72C and 93B of the Bill should be amended to provide for the reporting of incentive-based remuneration by senior employees of all Commonwealth entities and wholly-owned Commonwealth companies.
Recommendation 2
Performance-based payments to senior executives be required to be publicly reported.
Senator Sarah Hanson-Young Senator Peter Whish-Wilson
Member Participating Member