Bills Digest no. 56 2014–15
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WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.
Cathy Madden and Deirdre McKeown
Politics and Public Administration Section
25 November 2014
Contents
Purpose of the Bill
Structure of the Bill
Background
Committee consideration
Policy position of non-government parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions
Concluding comments
Appendix 1: Limitations and reductions to parliamentary retirement travel
Date introduced: 2 October 2014
House: House of Representatives
Portfolio: Special Minister of State
Commencement: Sections 1 to 4 on the date of Royal Assent; Schedule 1 on 14 May 2014; Schedule 2 the day after Royal Assent.
Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.
When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website.
Purpose of the Bill
The purpose of the Parliamentary Entitlements Legislation Amendment Bill 2014 (the Bill) is to amend:
the Members of Parliament (Life Gold Pass) Act 2002 (LGP Act) to:
- reduce the entitlement to the Life Gold Pass for former and current members
- introduce a public benefits test for use of the retirement travel benefit
- remove the spouse or de facto partner entitlement to travel (except for the spouse or de facto partner of a former Prime Minister) and
- change the title of the entitlement.
and the Parliamentary Entitlements Act 1990 (the Act) to:
- impose penalty loadings for other travel claims
- strengthen the declaration on the travel form and
- limit the dependent child travel entitlement.
The Bill also establishes a statutory basis for recovering overpayments made under either of the Acts.
The Bill has two Schedules. Schedule 1 provides for the main amendments to the Members of Parliament (Life Gold Pass) Act 2002 with the retrospective commencement date of 14 May 2014; Schedule 2 outlines the amendments to the Parliamentary Entitlements Act 1990 which commence the day after Royal Assent.
The entitlements of members of parliament (MPs) are complex and have attracted a great deal of interest and at times criticism by the community and in the media. Travel entitlements or alleged misuse of travel entitlements of MPs have garnered the most critical attention. As the Committee for the Review of Parliamentary Entitlements observed ‘the committee was aware that post-retirement travel, particularly the Life Gold Pass entitlement, is the benefit which most fuels the public’s opprobrium about politicians and the perception of “enjoying perks” that are out of keeping with community standards.’[1]
The entitlement of parliamentarians to what has been called the ‘life gold pass’ has been in operation since 1918. The entitlement was codified as the Members of Parliament (Life Gold Pass) Act 2002 which set out the entitlements for retired parliamentarians who satisfy the qualifying periods determined by the Remuneration Tribunal. The Remuneration Tribunal determines only the qualifying period for the Life Gold Pass.[2] The Committee to Review Members Entitlements, and the Remuneration Tribunal’s initial report into work assessment of the remuneration of members of parliament, both recommended reducing the benefit and closing the scheme prospectively to new members.[3]
In 2012, the then government legislated to implement the recommendations. The Members of Parliament (Life Gold Pass) and Other Legislation Amendment Act 2012 closed the scheme off to new members effective from 6 March 2012 and reduced the number of domestic return trips, from 25 to 10, that eligible members and their spouse or de facto partner were entitled to undertake.[4] A history of the LGP benefit, including the current arrangements, is available in the paper, Retirement Travel.[5]
The Department of Finance publishes information relating to payments to eligible MPs and their spouses or de facto partners under the current post retirement travel entitlement on their website.[6] The most recent report from July–December 2013 indicates there are seven former prime ministers, 158 eligible MPs, one surviving spouse of a former PM and 11 surviving spouses or de facto partners of eligible MPs.
A series of media reports about MPs making ‘dubious’ travel claims have called into question the integrity of MPs and their entitlements. The criticisms have highlighted the need to tighten rules relating to making travel claims and to clarify the role of the Department of Finance in providing advice on the claims.[7]
The Abbott Coalition Government announced reforms to strengthen the entitlements regime not long after taking office in 2013.[8] The Special Minister of State proposed implementing further measures recommended by the Committee for the Review of Parliamentary Entitlements in order to improve transparency and public respect for the entitlements system, in particular strengthening the declaration required when submitting a travel claim. These proposals included the introduction of loadings in particular circumstances when a member had to make an adjustment to their travel claim; limiting the age requirement for travel for children; tabling in Parliament the names of parliamentarians who fails to comply with the additional measures; limiting overseas travel; and preventing employment of relatives of a member of parliament.
These legislative changes are part of ongoing reforms aimed at improving the transparency and accountability of the entitlements framework including administrative changes such as prohibiting members employing family members in certain circumstances, improved education and mandatory training.[9]
The Abbott Coalition Government announced as part of the 2014–15 Budget that, for those who have qualified, the gold pass travel entitlements will be wound back for former and current members of parliament. As part of these reforms, spouses or de facto partners will no longer be eligible for travel and limits will be placed on eligibility and the class and number of trips per annum.
The Bill introduces the changes announced by the Coalition Government in 2013. In addition the Government has indicated it will be seeking changes to the entitlement to severance travel which is determined by the Remuneration Tribunal.[10]
Senate Finance and Public Administration Committee
The Senate Selection of Bills Committee referred the Bill to the Senate Finance and Public Administration Legislation Committee (SFPALC) on 1 October 2014 for the reason of ensuring the Bill complies with the Australian Constitution.[11] The Committee tabled the report on 24 November 2014. Details of the inquiry are on the Committee homepage.[12]
Senate Standing Committee for the Scrutiny of Bills
The Scrutiny of Bills Committee had no comment on the Bill.[13]
Parliamentary Joint Committee on Human Rights
The Committee examined the Bill and found the Bill is compatible with human rights.[14]
As noted above the Labor Party in government had legislated to limit the retirement travel benefit, the Life Gold Pass (LGP). The ALP will not oppose the Bill, particularly the provisions relating to limiting access to the LGP, although disagreeing with the reduction to the benefit for former prime ministers. The Shadow Special Minister of State has indicated the party may introduce some amendments, of a broader nature, during debate in the Senate.[15] In a submission to the SFPALC, the Shadow Minister reiterated the issues raised in his second reading speech such as the reduction of the travel for former Prime Ministers, tightening the definition of public benefit, cost to ministers and the bureaucracy of the new arrangements for claims and proposes the introduction of a work, health and safety framework for MPs.[16]
The Greens have long been opposed to the LGP scheme. Senator Bob Brown opposed the introduction of the Members of Parliament (Life Gold Pass) Bill 2002 and supported the abolition of the scheme. In 2003 the Abolition of Gold Travel Pass for Former Politicians (Reflecting Community Standards) Bill was introduced by Michael Organ, Greens Member for Cunningham. The party supported the reforms introduced by the Members of Parliament (Life Gold Pass) and Other Legislation Amendment Act 2012, particularly the closing off of the scheme to new members.[17]
The Association of Former Members of the Parliament of Australia (AFMPA) raised a number of concerns in their submission to SPALC inquiry into the 2012 Bill concluding that a 'reduction in existing benefits is unjustified'.[18] Following passage of the Members of Parliament (Life Gold Pass) and Other Legislation Amendment Bill 2012 the AFMPA raised the possibility of seeking legal compensation for the loss of the entitlement.
The AFMPA, in a submission to the current SFPALC inquiry, raised the issues of the retrospective impact of the legislation, the exclusion of spouses or de facto partners and the unjust acquisition of property as some of the reasons they are contemplating a High Court challenge. They described the Government’s action as ‘symbolic tokenism’ and questioned the amount of money to be saved by the measure.[19]
A number of former members were quoted in the media expressing their disappointment at the proposed changes after the May 2014 Budget announcement. Former ministers Amanda Vanstone and Laurie Brereton indicated the retrospective change to retirement benefits might spark a legal challenge.[20]
The Department of Finance (Finance) in a submission to SFPALC, noted that they consider the Bill would not result in an acquisition of property under subsection 51(xxxi) of the Constitution. However if compensation was granted by a court the amount would not exceed the savings from the measure.[21]
The Bill will achieve savings of $5 million across the forward estimates by reducing post-retirement travel benefits particularly those related to the LGP.[22]
The possibility that retired MPs may seek just compensation for the loss of benefits means that the measures may also incur costs. Not all former MPs utilise the LGP but potentially may benefit if compensation is granted: a point raised by the AFMPA in their submission to the Committee inquiry.[23] The 2014–15 Budget paper indicates the Government expects savings of $1.1 million in 2014–15 and $1.2 million in 2015–16 from reductions to post retirement travel.[24]
The Statement of Compatibility with Human Rights can be found at page 3 and attachment A of the Explanatory Memorandum to the Bill. As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.
The Bill may raise significant concerns for former eligible members and for current serving eligible members. The Bill potentially raises issues relating to the loss of an entitlement with monetary value which formed part of member’s benefits at the time they were serving in the Parliament.[25] Three current serving members reportedly voiced concerns in the Coalition party room when the proposed changes to the retirement travel benefit were discussed—their concerns focussed on the issue of retrospectivity and concerns about those former members who would be affected by the changes.[26]
Clause 4 of the Bill provides for compensation for acquisition of property, in recognition of the legal risk that the Bill, if enacted, is found to constitute an acquisition of property for the purposes of the Constitution.
Schedule I
Schedule 1 amends the Members of Parliament (Life Gold Pass) Act 2002 with amendments commencing 14 May 2014.
Items 1, 2, and 4 in Part 1 and item 38 in Part 2 act to change the title of the legislation from the Members of Parliament (Life Gold Pass) Act 2002 to the Parliamentary Retirement Travel Act 2002 and to change references in the Act and other legislation to the new terminology. New section 3A provides the benefit will now be called the Parliamentary Retirement Travel Entitlement (PRTE). This change to title of the benefit provides a more appropriate description of the benefit as well as eliminating the controversial description of the benefit as the “Life Gold Pass”. Item 8 inserts a new definition of a holder of a Parliamentary Retirement Travel Entitlement.
Items 5 and 9 are key provisions in strengthening the purpose test for use of the scheme. Previously the LGP Act stated that the ‘domestic return trip’ must not be for commercial purpose. Under the purpose test in the new section 4AA, the travel must be for the public benefit and not for commercial or private purposes. As the Shadow Special Minister of State, Gary Gray, states in his second reading speech that the term ‘public benefit’ is not defined further, which may lead to inconsistency in applying the test:
For instance, the bill requires that all travel post-service be for public benefit. It sounds good, but I do not think it would include travel to attend Gough Whitlam's funeral—and I think it should. And I am not even prepared to advise any of my friends who are former parliamentarians to seek advice from the department on whether or not they could utilise their travel to attend the funeral of the former Prime Minister; it is just too risky, and this bill makes it unnecessarily risky.[27]
Item 11 clarifies that the scheme is closed to new members except for former prime ministers.
Item 12 is the key amendment.[28] The Bill imposes retrospective time periods which limit the quantum of the benefit and sets expiry dates on access to the entitlement for eligible MPs. Item 12 provides that, for most former MPs who are now holders of a LGP, their entitlement to the benefit will expire on 13 May 2014.
New section 4B provides that any member who was not eligible before 14 May 2014 cannot become a holder of a PRTE unless they are a former prime minister. New section 4B also provides that the scheme will be closed off to all eligible members from 1 January 2020, except former prime ministers. This means the scheme will terminate for former eligible MPs, except for former prime ministers, by 2026 as the maximum entitlement period from 1 January 2020 is six years for former eligible senior office holders.
The new section 4C sets out four tiers of benefits for eligible MPs depending on their date of retirement and/or position held while serving in the parliament. The four categories are: former MPs; former ‘senior office holders’, current serving eligible MPs (of which there are two sub-categories – former MPs and former senior office holders) and former prime ministers.
For example, a former senator or member who retired on or before 14 May 2011 is not entitled to the parliamentary retirement travel entitlement after 13 May 2014. Members of parliament who retired after 13 May 2011 will have access to five return trips for three years after the date of retirement or at the end of the next parliament after their retirement (new subsections 4C(7) and 11(2) table item 2).
The Bill introduces the concept of ‘senior office holder’, defined in Item 8 as a former minister, former presiding officers or the leader of the opposition in the House of Representatives. If they retire on or before 13 May 2008 the will have no benefit after 13 May 2014; but if they retire after 13 May 2008 they are entitled to 10 return trips per year for six years after the MPs retirement or the second end of a parliament that occurs after the MPs retirement whichever comes first (new subsections 4C (4) and (6)).
Current serving MPs who became eligible before 14 May 2014 and retire after 14 May 2014 but before 1 January 2020 are entitled to five return trips for three years after retirement or the end of the first parliament whichever occurs first; current serving eligible senior office holders are entitled to 10 return trips for six years or two parliaments after retirement whichever comes first (new subsections 4B(2) and 4C(7) and 11(2) table items 1 and 2).
Items 13, 14,17, 18, 19, 25, 26, 32 and 33 abolish any entitlement by spouses or de facto partners of eligible former MPs and eligible current serving members to access retirement travel benefits (except for the spouse or de facto partner of former prime ministers).
The entitlement to post-retirement travel will continue for former prime ministers, although the benefit has been reduced. Item 10 clarifies that the scheme is closed to all new members except for former prime ministers who will be able to access the benefit for life. Item 15 reduces the benefit for former prime ministers from 40 domestic return trips per year to 30.
Item 16 provides that the spouse or de facto partner of a former prime minister is entitled to a reduced number of return domestic flights, 20 domestic return trips per year of which ten can be non-accompanying.
Part 3, items 39–41 provide transitional mechanisms that clarify any ambiguity relating to the impact of the retrospective commencement of the provisions as it relates to travel undertaken by eligible former MPs for the year commencing 1 July 2013 and for travel from 14 May 2014 to the day after the Bill receives Royal Assent.
Schedule 2
Schedule 2 amends the Parliamentary Entitlements Act 1990 (PE Act) with the amendments commencing the day after Royal Assent.
Definitions
Items 1, 2, and 4 insert or amend the following:
- the definition of claim to mean ‘a claim or request for a benefit that is made to the Commonwealth’
- the second limb of the definition of dependent child in section 3(b) to be a person who is ‘at least 16 but under 18’. The current definition applies to a person who is ‘at least 16 but under 25’. Although the opposition has stated its support for the Bill, the Shadow Special Minister of State, Gary Gray, indicated that the ALP does not agree with the reduction in domestic travel entitlements for dependent children under 25, stating that ‘I can see no good purpose, at a time when our work and lifestyle in this place are hard enough on families, to make that change for the travel of dependent children, albeit for children aged over 18 and under 25. They are still in the category of dependent children’[29]
- the definition of prescribed travel benefit to mean ‘a benefit covered by a determination under section 10B’ [see below for an explanation of this section]
- the definition of provides goods, services or facilities to cover goods, services or facilities provided by the Commonwealth itself or paid for by the Commonwealth for their provision by another person
- the definition of Secretary to mean ‘the Secretary of the Department’. The Department referred to is, at the commencement of the Bill, the Department of Finance.[30]
Item 3 provides that under the travel entitlement of Senior Officers, no travel may be undertaken by a dependent child who is aged 18 and over, but under 25, from the day after the Bill received Royal Assent[31]
Part 2— Benefits
Division 1—provisions applying to benefits generally
The new provisions discussed below reflect the changes outlined by the Special Minister of State, Senator Michael Ronaldson, in his press release dated 9 November 2013.[32] The minister announced a new compliance regime to operate from 1 January 2014 including a new declaration to be made by members of parliament submitting a travel claim. As part of this reform the government stated that parliamentarians making an adjustment to any claims made after 1 January 2014 would be required to pay a loading of 25 per cent in addition to the full amount of the adjustment.[33]
The Minister also stated that improvements to the Department of Finance records management system would be implemented to highlight ‘non-standard travel or usage amongst parliamentarians’.[34] As noted above the Government highlighted the need for training senators and members on issues such as parliamentary entitlements and office management practices. In debate on the Bill, Shadow Special Minister of State, Gary Gray, stressed the need to put better processes in place to deal with incorrect payments. He suggested that:
Transparency should also include the Department of Finance documenting the advice it gives to MPs and senators. It should provide the advice and it should keep that advice on file for consistent advice’s purpose. Consistent advice is important to parliamentarians.[35]
Obligation not to make travel claims in excess of the entitlement
Item 6 inserts new section 7A which creates a statutory obligation not to make travel claims in excess of the entitlement. The provisions of the current PE Act do not include any obligation to avoid such claims. This section works in conjunction with new section 10A (see below). While new section 7A creates an obligation not to make a claim for a benefit in excess of entitlement, it also ensures that the mechanism described in section 10A does not extend the boundaries of the benefits which may be provided to a parliamentarian under the PE Act and that the amount to which a person is legitimately entitled is not to be recovered.[36]
Item 7 inserts new sections 10A–10D. These sections enable a benefit paid in excess of the entitlement to be recovered. The provisions of the current Act do not include penalties for making travel claims in excess of entitlements, but as noted above, the declaration accompanying parliamentarians’ travel claims from 1 January 2014 has included an acknowledgement that a financial loading will be applied if an adjustment is required. The bill establishes a 25 per cent penalty loading on any adjustments (either voluntary or involuntary) of a parliamentarians’ claim for prescribed travel benefits.[37] The 25 per cent loading will not be applied when the adjustment is made within 28 days of the claim or when the overpayment is the result of an administrative error by the Department of Finance.
New section 10A introduces ‘a mechanism to address the risk that payments made in the course of administering the PE Act may constitute a breach of section 83 of the Constitution’.[38] This is in line with mechanisms included in other Acts, such as the Parliamentary Contributory Superannuation Act 1948.[39]
As part of this mechanism, new sections 10(B), 10(C) and 10(D) establish a statutory right for the Commonwealth to recover from a parliamentarian or former parliamentarian an amount equivalent to a payment made to, or on behalf of, a parliamentarian or former parliamentarian that is beyond entitlement under the Parliamentary Entitlements Act 1990. The Bill also establishes a statutory right for the Commonwealth to recover from a parliamentarian the 25 per cent penalty loading.[40] The Minister noted in his second reading speech that ‘[f]or the purposes of the 25 per cent penalty loading on adjustments, the bill includes a provision for the Special Minister of State to determine, by legislative instrument, the prescribed travel benefits that are subject to a 25 per cent penalty loading’.[41]
The Bill appears non-controversial in that both major parties and the Greens appear to support the changes to the life gold pass scheme and the tightening of rules around parliamentary travel entitlements. As the benefit previously known as the Life Gold Pass is viewed as being out of step with community expectations, no sitting member is likely to oppose the reduction and future termination of the Life Gold Pass scheme (except for its continued application for former prime ministers).[42]
The SFPALC report recommends the Bill be passed with two amendments. The first relates to changing the last date by which eligible MPs can access the scheme from 1 January 2020 to 1 July 2020 in line with the commencement terms of senators or the next federal election. The second clarifies the term of the benefit for those eligible former MPs who retire during their term of office.
The Committee also made further recommendations relating to the publishing of the purpose of PRTE travel on the Finance website and an amendment to correct the error in the note at the end of new section 10A(6) to indicate that a minister is not responsible for recovery of staff travel. The Committee also recommends a number of matters that should be referred to the Remuneration Tribunal for consideration including making the resettlement allowance a redundancy payment and the provision of occupational health and safety benefits for parliamentarians.[43]
It remains to be seen if any AFMPA High Court challenge will have an impact on the PRTE legislation and/or if compensation will be granted for loss of property.
Appendix 1: Limitations and reductions to parliamentary retirement travel
| A... |
who... |
and qualified for... |
is entitled to... |
for the period... |
| former Senator or Member |
retired on or before 13 May 2011 |
parliamentary retirement travel entitlement |
nil |
after 13 May 2014 |
| retired after 13 May 2011 |
parliamentary retirement travel entitlement |
5 return trips per year with no spouse entitlement |
three years from the date of the Senator or Member's retirement or at the next end of a parliament that occurs after that Senator or Member's retirement, whichever occurs first |
| former Minister, Presiding Officer or Leader of the Opposition in the House of Representatives |
retired on or before 13 May 2008 |
parliamentary retirement travel entitlement |
nil |
after 13 May 2014 |
| retired after 13 May 2008 |
parliamentary retirement travel entitlement |
10 return trips per year with no spouse entitlement |
six years from the date of the Senator or Member's retirement or at the second end of a parliament that occurs after that Senator or Member's retirement, whichever occurs first |
| current Senator or Member |
has not retired |
parliamentary retirement travel entitlement before 13 May 2014 |
5 return trips per year with no spouse entitlement |
provided that the Senator or Member retires on or before 1 January 2020 – three years after his or her retirement or the next end of a parliament that occurs after his or her requirement, whichever occurs first |
| current parliamentarian who is or was a Minister, Presiding Officer or Leader of the Opposition in the House of Representatives |
has not retired |
parliamentary retirement travel entitlement before 13 May 2014 |
10 return trips per year with no spouse entitlement |
provided that the Senator or Member retires on or before 1 January 2020 – six years after his or her retirement or the second end of a parliament that occurs after his or her requirement, whichever occurs first |
| former Prime Minister |
has retired |
parliamentary retirement travel entitlement |
30 return trips per year
20 return trips per year for his or her spouse or de facto partner (up to 10 of which can be non-accompanying/joining trips) |
|
Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2500.
[5]. C Madden and D McKeown, Retirement travel, Background note, 28 June 2013, Parliamentary Library, Canberra, 2013, accessed 24 November 2014.
[7]. J Swan, ‘Can I charge trip to taxpayers?’, The Sydney Morning Herald, 17 March 2014, p. 2; J Swan, ‘Finance failed to rule on Abbott’s taxpayer-funded travel to wedding‘, The Sydney Morning Herald, 21 February 2014, p. 2; M Grattan, ‘Slipper found guilty over trips to wineries’, The Conversation, 28 July 2014; all accessed 11 November 2014.
[10]. Remuneration Tribunal, Determination 2012/04, Members of Parliament - Entitlements, current consolidation as at 10 October 2014, accessed 23 October 2014. Severance travel entitles a former senator or member, not qualifying for a LGP, to travel at government expense for a maximum of five return trips within the first six months after his or her retirement from the Parliament.
[24]. Australian Government, ‘Part 2: expense measures’, Budget measures: budget paper no. 2: 2014–15, Parliamentary service travel entitlements – reduced funding, accessed 18 November 2014.
[27]. G Gray, ‘Second reading speech: Parliamentary Entitlements Legislation Amendment Bill 2014’, op. cit.
[33]. Ibid. The new travel declaration is: I declare that this travel was undertaken in mu capacity as an elected representative and I acknowledge that a financial loading will be applied if subsequent adjustment to this travel claim is required.
[35]. G Gray, Second reading speech, op. cit.
[36]. Explanatory Memorandum, Parliamentary Entitlements Legislation Amendment Bill 2014, op. cit., p. 20.
[38]. Explanatory Memorandum, Parliamentary Entitlements Legislation Amendment Bill 2014, op. cit., p. 20. Section 83 of the Constitution states ‘No money shall be drawn from the Treasury of the Commonwealth except under appropriation made by law’.
[39]. K Andrews, op. cit.
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