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Review of Parliamentary Entitlements Committee Report April 2010

Chapter 1 - Introduction

The parliamentary entitlements system has developed in an ad hoc way over some 108 years.  It’s time for comprehensive reform.
– Senator the Hon Joe Ludwig, Special Minister of State2

Background to the Review of Parliamentary Entitlements

On 8 September 2009, the Australian National Audit Office (ANAO) tabled Performance Audit Report No 3, 2009-10, Administration of Parliamentarians’ Entitlements by the Department of Finance and Deregulation.  At the same time, in response to the findings of the Auditor-General, the Special Minister of State (the minister), Senator the Hon Joe Ludwig, announced a number of immediate reforms to parliamentary entitlements.

The minister also advised that he had referred other matters to an independent panel to:

... trace out the path for the next stage of reform and I look forward to receiving their report in six months... The independent panel will be made up of the following distinguished former and current public servants:  Barbara Belcher, former First Assistant Secretary of the Department of the Prime Minister and Cabinet (Chair); John Conde AO, President of the Remuneration Tribunal; Jan Mason, General Manager of Corporate and Parliamentary Services of the Department of Finance and Deregulation; and Prof Allan Fels AO, former ACCC Commissioner and current Dean of the Australia and New Zealand School of Government.3

The review committee

In making that announcement, the minister established a Parliamentary Entitlements Review Committee (the committee) and issued the following terms of reference to guide its work:

Terms of Reference

The Review of Parliamentary Entitlements (the review) will provide advice and recommendations to government addressing issues such as:

In formulating advice and recommendations, the review should have regard to:

Current entitlements framework

It is generally acknowledged that the current federal parliamentary entitlements framework is overly complex, comprising a mixture of primary legislation, regulations, Remuneration Tribunal determinations, procedural rules, executive decisions, accepted conventions and administrative practices (this theme will be discussed in Chapter 3 – Limitations of the Current Framework).  Many of the entitlements lack clear boundaries and there are many shades of grey that can contribute to inadvertent or deliberate breaches of the entitlements rules – the consequences of which can damage the reputation of individual parliamentarians and the institution of parliament.

The complexity of the framework results in large part from its haphazard and incremental development over many years by a number of different authorities in response to political and legal contingencies.

There are also intrinsic strengths in the current framework however, and the committee, in considering the best way of achieving a fair and streamlined framework of entitlements, sought to enhance those strengths. The gradual introduction of transparency of expenditure on entitlements, commencing in 1998 and culminating in the announcement by the government on 8 September 2009 that all entitlements expenditure incurred from 1 July 2009 by the Department of Finance and Deregulation (Finance) would be regularly tabled in the parliament, has provided the framework with a vital robustness. Similarly, the framework has avoided many of the serious problems of other parliaments because of its ‘arm’s-length’, rules-based administration.

Parliamentary entitlements fall into two groupings:  remuneration arrangements and facilities; and support provided to enable senators and members to carry out their duties (tools of trade). Each of these two groupings is explored in some depth in the following chapters of the report.

Parliamentary allowances reviews

Section 48 of the Constitution provides for the payment of an allowance to members of parliament.

Historically there have been a number of methods of setting parliamentary base salary.  Prior to the establishment of the Remuneration Tribunal in 1973, salary was set by the Parliament itself.  To assist the Parliament a number of independent reviews were undertaken.4

These committees of inquiry were:  Report of the Committee of Enquiry into the Salaries and Allowances of Members of the National Parliament (Nicholas Report), 1952; Report of the Committee of Enquiry into the Salaries and Allowances of Members of the Commonwealth Parliament (Richardson Report), 1955; Report of the Committee of Enquiry into the Salaries and Allowances of Members of the Commonwealth Parliament (Richardson Report), 1959; and Salaries and Allowances of Members of the Parliament of the Commonwealth:  A Report of Inquiry by Mr Justice Kerr, (Kerr Report), 1971.There has not been a comprehensive review of parliamentary entitlements since the Kerr Report.

The Kerr Report5 noted there was no fixed pattern of approach to the timing and review of allowances and proposed the establishment of a Salaries Tribunal.  Subsequently, in 1973 the Remuneration Tribunal was established and the responsibility for setting parliamentarians’ salaries was removed from parliament.  In making its first Report and Determination in 1974, the Tribunal determined a number of existing entitlements including electorate allowance, stamp allowance, travelling allowance, spouse travel, car transport and charter entitlement.6

The Tribunal’s determinations have, however, never provided a complete coverage of entitlements.  In 1990 in the case of Brown v West7 the High Court considered, amongst other issues, the extent to which it was possible for the executive to provide benefits to parliamentarians in the absence of legislation.  The proceedings had been brought by the then Shadow Attorney-General, the Hon Neil Brown, against the then Minister for Administrative Services, the Hon Stewart West, to challenge the decision to supplement the postage entitlement of senators and members beyond the limit determined by the Remuneration Tribunal. The High Court found that the executive’s power did not extend to the supplementation of the postage allowance.

As a result of the High Court decision, the parliament enacted the Parliamentary Entitlements Act 1990 to supplement the Tribunal’s determinations and override any inconsistency.  The Act validated retrospectively the provision of benefits which had been made available as a result of the decisions of successive governments before May 1990, but which were not covered by legislation.  It also provided a legislative basis for future decisions.  This legislation was drafted in haste and there remain to the present day many gaps in its provisions.

The opportunity was not taken in 1990 to consolidate all non-salary entitlements under a single legislative authority.  This led to a dual source of authority for the provision of entitlements to support senators and members, with one authority setting entitlements, frequently with a high degree of prescription, and another agency having to interpret, provide advice on and apply the multiple rules.

The Tribunal’s power to determine parliamentarians’ base salary was removed by the Remuneration and Allowances Act 1990 (R&A Act).  Legislation enacted in 1994 linked the base salary to an Australian Public Service senior executive award rate.  That rate became frozen from 1996 as senior executives obtained pay increases through workplace agreements.  In December 1999, the government regulated under the R&A Act to link the base salary to a reference salary in the Tribunal’s Principal Executive Office structure.  In 2008, the government regulated to prevent the flow-on of a pay rise awarded by the Remuneration Tribunal, effectively freezing parliamentarians’ salaries from 1 July 2008 and reducing the parliamentary base salary by $5,470 per annum below the rate of any subsequent reference salaries determined by the Tribunal.

Australian National Audit Office reports

The ANAO has undertaken a performance audit of selected aspects of the administration of parliamentary entitlements on five occasions:  in 1991, 1997, 2001, 2003 and 2009.  In the 2009 Report, the ANAO noted the lack of action on a review following the 2001 Report:

... ANAO’s 2001‐02 Audit Report on Parliamentarians’ entitlements indicated that there would be merit in a comprehensive review of the entitlements framework.  No such review was undertaken...The result is an entitlements framework that is difficult to understand and manage for both Parliamentarians and Finance.8

The committee’s approach to the review

The committee placed advertisements in the Australian Financial Review and the Weekend Australian on 3 October 2009 seeking submissions.  The chair wrote to all current parliamentarians, affected former parliamentarians, former prime ministers, former governors-general, state jurisdictions and selected academics and Commonwealth agency heads inviting their views.  While public hearings were not held, the chair and other members of the committee spoke to a number of those who made submissions and other interested parties.  The terms of reference and details about the review were also placed on Finance’s website and any interested parties were able to make submissions via the internet.

In seeking submissions, the committee stated that submissions would not automatically be published (so as not to deter potential submitters from frankly expressing their views or recounting difficulties they had experienced) but that, if the committee later favoured publication, approval would be sought.  The committee further indicated any request under the Freedom of Information Act 1982 for access to a submission would be determined in accordance with that Act.

The committee received 39 written submissions.  Following public interest in their content, the committee sought agreement from all those who had made submissions to publish them.  As a result, 29 submissions were subsequently placed on Finance’s website.

The committee was supported by a secretariat, which undertook analysis of the legislative and entitlements frameworks to identify strengths and weaknesses as well as gaps in compliance arrangements.  The review also examined parliamentary entitlements in other jurisdictions, including in selected overseas jurisdictions.

The committee did not examine superannuation arrangements, other than impacts on the schemes from restructuring of remuneration, nor the general provision of facilities for senators and members at Parliament House.

Note of Thanks

The committee appreciated the able assistance provided by a secretariat headed by Ms Carolyn Hughes of the Department of Finance and Deregulation, with support from Ms Sue Sadauskas, Ms Margaret Emerton, Ms Vikki Darrough and Ms Pamela Tanner (all from the Department of Finance and Deregulation), Mr Cameron Heath (Department of the Prime Minister and Cabinet) and Mr Lachlan Kennedy (Attorney‑General’s Department).

2. Press Conference by Senator the Hon Joe Ludwig, Canberra, 8 September 2009.

3. Ludwig, J Special Minister of State, (2009) Reform of Parliamentary Entitlements, Canberra, 8 September.

4. Submission to the review by the Commonwealth Remuneration Tribunal, p.7.

5. Kerr, J (1971) Salaries and Allowances of Members of the Parliament of the Commonwealth: A Report of Inquiry by Mr Justice Kerr, AGPS: Canberra, p.12.

6. Note: This report was rejected by the government.

7. Brown V West (1990) 169 CLR 195.

8. Australian National Audit Office (2009) Administration of Parliamentarians’ Entitlements by the Department of Finance and Deregulation, Audit Report No.3, 2009-10, ANAO, Canberra, p.14.

Executive Summary

Chapter 2 – The Australian Parliamentarian

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Last Modified: 23 March, 2011