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Review of Parliamentary Entitlements Committee Report April 2010

Chapter 4 - Framework

As suggested in the previous chapter, it is possible, and the committee considered it useful, to view the parliamentary entitlements framework as having two distinct streams:  payments in the nature of remuneration; and funds made available for what the committee has termed tools of trade.  Responsibility for the entitlements framework is currently shared between the executive government and the Remuneration Tribunal, but not along the lines of the two streams.

The committee considered there should be a clearer separation between remuneration and the tools of trade provided to support senators and members in carrying out their roles.  Remuneration should be independently determined by the Remuneration Tribunal and the tools of trade matters should be covered by a single piece of legislation, administered by the Special Minister of State (the minister).

Role of the Remuneration Tribunal

Under the Remuneration Tribunal Act 1973, the Remuneration Tribunal determines a range of the allowances and entitlements for senators and members of the federal parliament, including ministers.  However, the Tribunal does not determine all allowances and entitlements; others are provided under the Parliamentary Entitlements Act 1990 (the PE Act) and are determined by the government.  The major parliamentary entitlements determined by the Remuneration Tribunal are:  travelling allowance rates and travel related provisions; electorate allowance; the qualifying periods for the Life Gold Pass; severance travel (for those not qualifying for the Life Gold Pass); and certain office facilities.  These determinations are disallowable by the parliament.

Significantly, the Remuneration Tribunal does not have the power to determine parliamentary base salary or the additional salaries payable to ministers, but does determine the additional salaries payable to parliamentary office holders such as the Leader of the Opposition, President of the Senate, Speaker of the House of Representatives and various whips and chairs of parliamentary committees. 

Parliamentary base salary is governed by the Remuneration and Allowances Act 1990 (the R&A Act) and is a matter for government decision.  The appropriation for funding for additional salaries payable to ministers is made under the Ministers of State Act 1952.  The Remuneration Tribunal’s role in regard to parliamentary base salary and the additional salaries payable to ministers is to provide advice.  Until the R&A Act was enacted the Remuneration Tribunal directly determined parliamentary base salary. 

There was strong support from the senators and members from whom the committee heard, and also from the Remuneration Tribunal, for restoring the Tribunal’s role of directly determining parliamentary base salary.  Such a course would be consistent with the committee’s desire to make the entitlements system more transparent with decision-making responsibility clearly defined.  The committee therefore recommends that the R&A Act be amended to restore the Remuneration Tribunal’s power.  The committee also considered that the process of setting parliamentary remuneration would be more accountable if the Tribunal published the reasons for its decisions.

Determinations of the Remuneration Tribunal are currently disallowable instruments, meaning that they must be tabled in each House of Parliament and either House can pass a resolution that makes the determination effectively null.  The Tribunal’s parliamentary remuneration determinations have been opposed in the parliament in the past, and action has been taken not only to remove its power to directly determine parliamentary salary but to defer salary increases.

On balance, the committee considered the value of the Tribunal’s independence could be further enhanced if its determinations were not subject to disallowance in the parliament.  The committee did not reach this conclusion lightly.  Parliamentary scrutiny of proposed expenditure with the possibility of amendment and rejection is usually the ideal.  Current arrangements, however, do not provide the means to ensure an appropriate level of remuneration for senators and members.  The committee considered that the Tribunal’s parliamentary determinations should be implemented without political intrusion.  In this regard, the committee noted that a disallowance provision was not a universal feature of other tribunals’ decision-making; for example, minimum wage determinations made by the wages panel of Fair Work Australia are not subject to parliamentary disallowance.

The parliament would of course retain the power to consider legislation introduced specifically to set parliamentary remuneration.

Recommendation 1

That the government:

  1. restore the power of the Remuneration Tribunal to determine parliamentary base salary
  2. require the Remuneration Tribunal to publish reasons for its decisions in relation to parliamentary remuneration, and
  3. remove the parliament’s ability to disallow parliamentary remuneration determinations made by the Remuneration Tribunal.

Determining tools of trade

Determining the tools of ‘the parliamentary trade’ is currently shared by the Remuneration Tribunal and the minister (under regulations made under the PE Act).  This duality contributes to the complexity of the parliamentary entitlements framework.  Clearly separating these expenditure items from remuneration would assist in determining the standards and conditions that should apply.

The committee considered whether tools of trade should be determined by an independent body, but concluded that determination under the regulating power of legislation would be preferable.  Most overseas and Australian jurisdictions have separated the remuneration determination role from the role of determining tools of trade entitlements.

Determining the tools of trade under the regulating power of legislation would allow for debate in the parliament and the provisions to be drafted using the expertise of the Office of Legislative Drafting.  That process would also enable the proposals, which have considerable cost implications, to be costed and considered by the government in the context of the overall Budget and competing funding priorities.  It was for these reasons, and the level of detailed administration involved, that the committee preferred executive regulation as the authority for tools of trade rather than either the Remuneration Tribunal or a new independent body.

The committee considered, however, that the minister should have the capacity to draw on independent advice to review the tools of trade at least once in the life of a parliament and also before he or she made decisions on more complex or potentially partisan matters.  An advisory committee for this purpose should be convened only when business was to be placed before it by the minister, should not have a majority membership of former parliamentarians and should not have any current parliamentarians as members.

To ensure full transparency of the process of determining tools of trade, the minister should publish decisions on tools of trade matters, including any advice obtained from the advisory committee and the government’s response to its recommendations.

Recommendation 2

That the Special Minister of State:

  1. determine tools of trade entitlements under the regulating power of legislation and draw on advice from an advisory committee convened as required but at least once in the life of a parliament, and
  2. publish decisions on tools of trade matters, including any advice from the advisory committee and the government’s response to that committee’s recommendations.

Legislative model

The ANAO recommended principles-based legislation be enacted to authorise the provision of entitlements for members of parliament.54

An issue identified by the government for consideration by the committee was the development of a single principles-based legislative basis authorising the provision of specified entitlements, identifying who is eligible to access these entitlements and in what circumstances, and the purposes for which these entitlements may be used.

Chapter 3 of this report outlines the inconsistencies, ambiguities and overlap in the present framework arising, in part, from the splitting of rulemaking authority between the minister and the Remuneration Tribunal.

The committee considered overseas and Australian legislative models and found there was a number of different models and little uniformity in the determining bodies responsible for parliamentary entitlements.  The committee considered that tools of trade should be authorised under regulations made under legislation enacted for that purpose.  The new legislation would clearly distinguish tools of trade from remuneration matters, which would remain determined by the Remuneration Tribunal under the existing separate legislation.

The committee considered whether the tools of trade legislation should contain principles to guide senators and members in accessing publicly funded entitlements.  In particular it examined the principles recommended to the UK Government by the Kelly Report on MPs’ Expenses and Allowances55 and the non-legislative ‘value for money’ principles included in the Commonwealth Procurement Guidelines.56

While the legislation might benefit from a general statement in support of an accountable, audited system of entitlements under which parliamentarians act with probity and integrity in the use of publicly funded benefits, the committee concluded that further legislated principles might carry little benefit.

The committee considered that the object of the legislation should be to provide a consistent, simple and transparent framework.  This would give senators and members the tools of trade necessary to carry out their roles and responsibilities and the provisions that would apply when they were accessing publicly funded entitlements.  The provisions in the legislation would therefore include, for example, a clear statement that the tools of trade should not be used for commercial purposes.

There are currently no express enforceable legislative provisions dealing with debt recovery in relation to federal parliamentary entitlements.  The committee recommends that the legislation provide that where a claim has been wrongfully made it would be treated as a debt due to the Commonwealth and would be recoverable in a court of competent jurisdiction.  The government could consider whether it is possible, or desirable, to make provision in legislation for the Commonwealth to withhold payments in relation to recoverable debts.

The government would need to consider any transitional arrangements that might be needed to introduce simplicity and a clearer delineation between remuneration and tools of trade matters while the new legislation is being developed and approved by the parliament.  For example, the non-remuneration matters currently determined by the Remuneration Tribunal could be temporarily transferred to the regulations under the PE Act.  Other amendments could also be made to those regulations to bring all tools of trade matters together in one place.

Recommendation 3

That the government enact a single piece of legislation to provide for the regulation of the tools of trade provided to senators and members at public expense.

Allocations

Within the current entitlements framework, costs are contained primarily by the use of rules and eligibility criteria.  The use of capped allocations was raised in submissions from Finance and the Department of the House of Representatives.  The use of capped allocations is common in overseas and interstate jurisdictions and would help to contain costs at a predictable level while allowing the framework to be simplified.

Capped allocations can be described as aggregate sums, fixed in advance, intended to cover the total cost of a service or services, usually for a year in advance, which provide the recipient with the discretion to decide which items to fund. 57  Capped allocations are an alternative to activity-based or itemised expenditure and can operate to provide supplementary or additional expenditure to itemised accounts.  Usually the complexity of the rules applying to allocations is proportionate to the size of the allocation.

The current entitlements regime includes the following capped allocations:  Electorate Allowance, Electorate Charter, Family Reunion Travel, Electorate Staff Travel, Publications and Office Requisites and Stationery.  The value of the Canberra/intrastate Family Reunion Travel allocation is determined by pooling the value of a number of trips specified by the Remuneration Tribunal.  The allocations in the current framework have minimal spending discretion and are governed by a high level of prescription.

The whips’ submission to the committee proposed that the word entitlements be replaced by budgets or allocations.  Such a naming convention would highlight that each item or service provided to senators and members incurs a cost to the Commonwealth.

In addition to the general recommendations made below, the committee has made specific recommendations in respect of capped allocations for discretionary office equipment (Chapter 8) and car transport (Chapter 7).

Designing capped allocations

There are generally three important decisions to be made when designing capped allocations:  the basis on which the allocation is calculated; any conditions applying to the use of the allocation (including specifying the items that may be provided under the cap); and the accountability framework for the expenditure of funds.

The committee took the view that, as far as practicable, the conversion of uncapped entitlements to capped allocations should be cost-neutral.  To this end, cap-setting for each allocation should be guided by the principle that the current total expenditure on facilities to be included within the allocation should not be exceeded.  Patterns of recent actual use, including any predictable deviations from average use, should be taken into account when setting the allocation.

Recommendation 4

That the government cap parliamentarians’ allocations at levels that have regard to patterns of actual use, while accepting the possibility of increased expenditure if more flexibility or additional facilities and services are later provided within the terms of each allocation.

The use of administrative controls will further support accountability and simplification of the framework and assist in an orderly transition from uncapped entitlements to capped allocations.  Suitable administrative mechanisms might include auditing, regular reporting to senators and members through their monthly management reports, and transparent public disclosure of expenditure.

Recommendation 5

That the government accompany the introduction of capped allocations with additional administrative controls, including auditing, transparent disclosure of expenditure and the provision of advice to senators and members about their level of use of each allocation.



54. Australian National Audit Office (2009) op. cit..

55. Committee on Standards in Public Life (2009), Twelfth Report, Chapter 3, (Sir Christopher Kelly KCB, Chair), presented to the UK Parliament, November 2009.

56. Department of Finance and Deregulation (2008) Commonwealth Procurement Guidelines, Financial Management Guidance No. 1, December 2008, Department of Finance and Deregulation, Canberra.

57. Refer to World Health Organisation glossary: http://www.who.it/observatory/Glossary/TopPage?phrase=Global%20budget.
Australian National Audit Office (2009) op. cit
..

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Chapter 3 – Limitations of the Current Framework

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Chapter 5 – Remuneration


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Last Modified: 7 June, 2010