|For a long time the desire to dissect and examine the Parliamentary remunerations structure has been something that I wanted to do. This series of posts is an in-depth expose on the remunerations and perks of our Federal and State Parliamentarians, and other senior Public Servants.
The research was prompted by the 35% increase in the base-salary scale in late 2011 and 2012.
The nagging issue has been whether the quality of Candidate we have in positions to ‘Lead’ our Nation, our States and Territory’s, are good enough. A lingering question is whether the Candidates coming into the Parliament have come because of the generous pay scales, the superannuation schemes attached to post Parliamentary life, and all the additional perks available.
This then leads to more questions about whether the pay scales on offer are adequate to attract the best people, people with demonstrated Leadership skills?
An outcome of this research might lead to some recommendations and suggestions that provide a different perspective.
When Prime Minister Kevin Rudd froze Parliamentary remunerations at their then levels when the GFC fallout began to impact in 2008 – his popularity as the Prime Minister was at record highs. The electorate responded to the restraint.
This decision went through both Houses unchallenged. Rudd’s demise is linked to this legislation and the ‘perceived’ angst of backbenches who saw Rudd making no real sacrifice because he was married to a very wealth wife, where most of his fellow parliamentarians depended on their salary to cover their living costs.
Rudd’s demise bought forward an immediate change to the ‘restraint’ mandate and within weeks the new regime was preparing for a substantial overhaul of Parliamentary entitlements and remunerations. The outcome of this Remuneration Tribunal overhaul resulted in 35% increases to the ‘base-salary’ levels. The Prime Minister’s salary went to almost $500,000 p/a from $370,000.
This compared with the American President’s then and current salary of US$400,000 p/a.
What is the ‘Base Salary’ and how it came about:
Can be read in detail here … to quote in part from this source –
… Since 1901, the Parliament has enacted legislation to define the parliamentary base salary for the purposes of Section 48 of the Constitution.
The Remuneration and Allowances Act 1990 defines a parliamentary allowance which is consistent with the arrangements whereby the Remuneration Tribunal determines the remuneration of parliamentarians.2 Section 8 provides that salaries and allowances are to be paid out of the Consolidated Revenue Fund. … continues …
At the Constitutional Convention at Sydney in 1891, Sir Samuel Griffith said:
“One of the first things to be done by the parliament of the commonwealth in its first session would be to settle the salaries of ministers, and a great number of other matters of that kind. We have, therefore, given them power to deal with this subject. We did not think it necessary to make this in any sense a payment of members bill. We lay down, however, the principle that they, are to receive an annual allowance for their services, and we thought that it should start in the first instance at £500.”
At the Adelaide Convention, however, the draft constitution bill debated specified an amount of £400 and this was the annual allowance subsequently enacted in the Constitution.
In 1907 parliamentarians made themselves liable to the payment of State income taxes. Tax concessions for electorate expenses were allowed from 1925.
Between 1901 and the establishment of the Remuneration Tribunal in 1973, Parliament adjusted allowances following decisions of executive government or as the result of recommendations from committees of inquiry.
Justice Kerr in 1971 noted that during this time there was ‘no fixed pattern of approach’ to the timing and method of reviewing base salaries—a process that invariably attracted criticism. In 1971 the Kerr Inquiry suggested the establishment of a ‘Salaries Tribunal … authorised by legislation to review salaries and report at regular stated intervals.’
Kerr also wrote:
Nothing … should prevent the Parliament or the Government from rejecting recommendations or from taking action not in accordance with what is recommended.
From its establishment in 1973, the Remuneration Tribunal, using a range of evidence and indicators, determined the ‘base-salary’ with reference to second division officers of the Commonwealth Public Service. Adjustments were then made by applying National Wage Case decisions. In 1979 the Government legislated to remove the Tribunal’s recent determination that these adjustments be automatic.
In 1987 the Tribunal convened a conference for interested parties to examine parliamentarians’ salaries. An independent review was consequently conducted for the Tribunal in 1988. The resulting report recommended increases based on work value and community pay standards. The review strongly recommended that there be no linkage between the base-salary and APS salaries. Increases determined by the Tribunal at that time were deferred.
With the Remuneration and Allowances Act 1990, the Government removed the Tribunal’s power to determine base salaries and allowed a phased increase to the allowance over three years. The legislation also provided a link with SES Band 1 salaries in the APS—in contrast to the recommendation in the 1988 review. Adjustments to the base salary were made by means of national wage case decisions and, from 1992, agreements between the Government and public sector unions.
Legislation enacted in 1994 ensured that the base salary was equivalent to the minimum APS SES Band 2 salary level. The then Workplace Relations Act 1996 enabled SES salaries to be set through individual Australian Workplace Agreements (AWAs), thereby removing the standard against which the base salary was determined. With the expiry of the final APS Enterprise Agreement at the end of 1996, the mechanism by which adjustments were made to the base salary ceased.
Legislative changes to the APS in 1999, among other matters, amended the Remuneration and Allowances Act 1990 and the Remuneration Tribunal Act 1973.
Prior to 1901 there was no ‘base-salary’ for Members serving as Governor’s and the like.
History of the ‘Base-Salary’:
[The APH website database has been used in compiling the following information. Links have been provided to documents used where applicable.]
The following Table provides Parliamentary increases in ‘base-salary’ increments since the late 1960’s through to the current ‘base-salary’ level of $190,500 p/a.
Links used to compile the above Table: Excel Spreadsheet – APH Data– , APH PDF file, and ABS Spreadsheet.
The Headline outcome in this Table is the ‘male average wage’ comparison with the ‘Base-Salary’ of parliamentarians.
The 2012 number – 35.16% – is the lowest number since 1968 – giving rise to a debate that Politicians have never been better paid in comparison to those they seek to govern. It can also be said that a large portion of this ‘base-salary’ increase came in the period after the worst of the GFC when wage outcomes in the private sector, job security, and industry shutdowns are at their worst in 20+ years.
The restraint imposed under Rudd has not been replicated under the current Government. The Opposition, the Greens, and the Independents could have blocked the passing of the new Tribunal recommendations – it would appear that Mr Rudd’s initiative was not long on the conscience of Members and Senators.
The Remuneration Tribunal who provide the advice on increases to the ‘base-salary’ are themselves public servants and in turn also benefit from any increase to the ‘base-salary’ increments.
This has to be considered a ‘conflict of interest’.
Any productivity or other scale used to warrant or benchmark these increases – i.e. CPI and the like, ultimately become self-fulfilling. There has never been a year of negative inflation in the Table above – nor GDP growth, nor Parliamentary ‘base-salary’ level. This is the same for private sector wage outcomes. But those outcomes often have productivity based clauses – Parliamentarians do not have that exposed accountability.
The ‘base-salary’ is used to measure all annual remuneration salaries of Parliament and other senior Public Servant appointments.
A schedule of the multipliers used for Federal Parliamentarians is delivered below, bearing in mind that everybody serving as a MP or Senator earns the base-salary. These multipliers are additional remuneration.
Various Federal Parliamentary Positions/Offices: [As a percentage of the base salary, per annum.] – see on-line source here for Non-Ministerial MP’s … and here for Ministers …
- Prime Minister – 160% – Julia Gillard
- Deputy PM – 105% – Wayne Swan
- Government Leader of the Senate – 87% – Stephen Conroy
- Leader of the Opposition – 85.0% – Tony Abbott
- Leader of the House – 75% – Anthony Albanese
- Other Minister in Cabinet who is also Manager of Government Business in the Senate – 75%
- President of the Senate – 75.0%
- Speaker of the House of Representatives – 75.0%
- Other Ministers in Cabinet – 75%
- Other Minister who is also Manager of Government Business in the Senate – 67.5%
- Other Ministers – 57.5%
- Deputy Leader of the Opposition – 57.5%
- Leader of the Opposition in the Senate – 57.5%
- Leader of a recognised party of more than 10 members of Parliament, other than a party whose Leader is the Prime Minister or the Leader of the Opposition – 45.0%
- Leader of a recognised party of at least 5, and no more than 10, members of Parliament – 42.5%
- Manager of Opposition Business in the House of Representatives – 27.5%
- Chief Government Whip in the House of Representatives – 26.0%
- Shadow Minister (see clause 2.4) – 25.0%
- Chief Opposition Whip in the House of Representatives – 23.0%
- Shadow Minister (see clause 2.4) – 20.0%
- Deputy President and Chair of Committees in the Senate – 20.0%
- Deputy Speaker in the House of Representatives – 20.0%
- Deputy Leader of the Opposition in the Senate – 20.0%
- Chief Government Whip in the Senate – 20.0%
- Chief Opposition Whip in the Senate – 18.0%
- Second Deputy Speaker in the House of Representatives – 13.0%
- Whip in the House of Representatives of a Government party with more than 10 Members in the House 13.0%
- Whip in the House of Representatives of an Opposition party with more than 10 Members in the House – 12.0%
- Head of a recognised party, not being a party whose Leader is the Prime Minister or the Leader of the Opposition, with at least five members in each house, sitting in the house other than that in which the Leader of the party sits – 11.0%
- Whip in the House of Representatives of a party with at least 5, and no more than 10, Members in the House – 9.0%
- Whip in the Senate of a recognised party of at least 5, and no more than 10, Senators – 9.0%
- Government Deputy Whip in the Senate – 5.0%
- Opposition Deputy Whip in the Senate – 5.0%
- Deputy Whip in the House of Representatives of a Government party with more than 10 Members in the House – 3.0%
- Deputy Whip in the House of Representatives of an Opposition party with more than 10 Members in the House – 3.0%
- Member of the Speaker’s Panel in the House of Representatives – 3.0%
- Temporary Chairman of Committees in the Senate – 3.0%
- Deputy Whip in the House of Representatives of a party with at least 5, and no more than 10, Members in the House – 2.0%
- Chair of the Joint Statutory Committee of Public Accounts and Audit – 16%
- Chair of the Joint Statutory Committee on Public Works – 16%
- Chair of the Joint Standing Committee on Foreign Affairs, Defence and Trade – 16%
- Chair of the Joint Standing Committee on Treaties – 16%
- Chair of a Joint Statutory Committee or Joint Standing Committee, not otherwise specified (except the Joint Standing Committee on the Parliamentary Library) – 11%
- Chair of a Senate Legislative and General Purpose Standing Committee – 11%
- Chair of a House of Representatives General Purpose Standing Committee – 11%
- Chair of a Joint Select Committee or Select Committee in the Senate or the House of Representatives – 11%
- Chair of an Investigating Standing Committee established by resolution of either House – 11%
- Chair of the Senate Standing Committee of Privileges – 11%
- Chair of the House of Representatives Standing Committee of Privileges – 11%
- Chair of the Senate Standing Committee on Regulations and Ordinances – 11%
- Chair of the Senate Standing Committee for the Scrutiny of Bills – 11%
- Chair of the House of Representatives Standing Committee on Procedure – 11%
- Deputy Chair of the Joint Statutory Committee on Public Accounts and Audit – 8%
- Deputy Chair of the Joint Statutory Committee on Public Works – 8%
- Deputy Chair of the Joint Standing Committee on Foreign Affairs, Defence and Trade – 8%
- Deputy Chair of the Joint Standing Committee on Treaties – 8%
- Deputy Chair of a Joint Statutory Committee or Joint Standing Committee, not otherwise specified (except the Joint Standing Committee on the Parliamentary Library) – 5.5%
- Deputy Chair of a House of Representatives General Purpose Standing Committee – 5.5%
- Deputy Chair of a Joint Select Committee or Select Committee in the Senate or the House of Representatives – 5.5%
- Deputy Chair of an Investigating Standing Committee established by resolution of either House – 5.5%
- Deputy Chair of the Senate Standing Committee of Privileges – 5.5%
- Deputy Chair of the House of Representatives Standing Committee of Privileges – 5.5%
- Deputy Chair of the Senate Standing Committee on Regulations and Ordinances – 5.5%
- Deputy Chair of the Senate Standing Committee for the Scrutiny of Bills – 5.5%
- Deputy Chair of the House of Representatives Standing Committee on Procedure – 5.5%
- Chair of the Senate Standing Committee of Senators’ Interests – 3%
- Chair of the House of Representatives Committee of Members’ Interests – 3%
- Chair of a Parliamentary Committee concerned with public affairs rather than the domestic affairs of Parliament not otherwise specified – 3%
Can you imagine the accountancy required in keeping track of these appointments and the additional perks that go with the Committee members and the like?
There is no private sector job where any Senior Executive like an MP of Senator gets paid additional remuneration for time and effort spent. What they do have is a bonus opportunity and that is negotiated and contingent on specific profit outcomes.
A senior MP or Senator might serve on three or four committees, have a Parliamentary appointment as well, and boosts their ‘base-salary’ by 50% or so.
Base Salary of other Senior Government Appointees:
- Judges: High Court, Federal, State, etc … see link here …
- Chief of the Defence Force – see Link here.
- Commissioner of Taxation – see Link here.
- CEO of Australian Customs & Border Protection Service – see Link here.
- Auditor-General for Australia, Australian Statistician – see Link here.
- To see CEO Remuneration scales for APRA, ASIC, ACCC, Federal Police, DPP, FWA, and the Management line under these Departments – see link here.
There is a lot more to Members and Senators entitlements – to read a full list contained in the Members Handbook 43rd edition use this – link here … [this file is almost 4MB and will take a few moments to load.]
In addition to the above base-salary and other MP and Senator entitlements, there is of course the employer contribution to the Members and Senators personal superannuation scheme – some 15.4% of the annual salary – [i.e. base salary plus all other entitlements as outlined above.] –
The next Part of this series will be about Parliamentary ‘Superannuation’ schemes and the ‘Future Fund’, now considered to be a Sovereign Wealth Fund.