Introduction
Senators and members receive an annual allowance by way of
basic salary—$211,250 from 1 July 2019.[1] This research
paper explains the legislative basis, fixing and linking mechanisms for the
allowance. Adjustments to the base salary since 2000 and 1983 are provided in
Table 1 and Graph 1 respectively.
Constitutional
and legislative basis for payment
Section 48 of the Constitution
provides for the payment of Members of Parliament:
Until the Parliament otherwise provides, each senator and
each member of the House of Representatives shall receive an allowance of four
hundred pounds a year, to be reckoned from the day on which he takes his seat.
Since 1901, the Parliament has enacted legislation to define
the parliamentary base salary for the purposes of Section 48 of the Constitution.
Subsection 14(2) of the Parliamentary
Business Resources Act 2017 (PBR Act) provides that remuneration
must include a determination of an annual allowance payable for the purposes of
section 48 of the Constitution known as base salary.[2] Section 59
provides that salaries and allowances are to be paid out of the Consolidated
Revenue Fund.
Section 61 of the PBR Act allows the Governor-General
to make regulations necessary to give effect to the Act. The Parliamentary Business
Resources Regulations are now in force.
Remuneration Tribunal
The Remuneration
Tribunal is an independent statutory body established by the Remuneration
Tribunal Act 1973. The PBR Act allows
the Tribunal to inquire into and determine remuneration and allowances paid out
of consolidated revenue to senators and members.[3] In 1974 Parliament
disapproved the Tribunal’s determination increasing the base salary to $20,000
per annum. Since that time the Parliament has also modified determinations,
postponed increases and enacted reduced allowances previously determined by the
Tribunal as an example of wage restraint.[4]
The commencement of the Remuneration and Other
Legislation Amendment Act 2011 restored the power of the Remuneration
Tribunal to determine parliamentary remuneration. The legislation also removed
the power of the Parliament to disallow parliamentary remuneration
determinations made by the Tribunal.
Parliamentary
base salary—a brief history
1901–1973
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.[5]
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.[6]
In 1907 parliamentarians made themselves liable to the
payment of State income taxes.[7] Tax concessions
for electorate expenses were allowed from 1925.[8] In 1907 the
Parliament also enacted the Parliamentary Allowances Act 1907, raising
the base salary from £400 to £600.
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.[9] In 1971 Justice Kerr
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.[10] 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.[11]
Remuneration Tribunal
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.[12] Adjustments were
then made by applying National Wage Case decisions. In 1979 the Government
legislated to remove the Tribunal’s determination that these adjustments be
automatic.[13]
In 1987 the Tribunal convened a conference for interested
parties to examine parliamentarians’ base salary.[14] 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 Australian Public Service (APS) salaries.[15] 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 Senior Executive Service (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.
Reference
salary—under the PEO Classification
In Report 1999/01 the Tribunal recommended that the base
salary be linked to a reference salary under the Principal Executive Office
(PEO) Classification Structure.[16] The Government
accepted this recommendation and introduced the Remuneration
and Allowances Regulations 2005 to create the link. The Regulations provided
for the reference salary to be 100 per cent of the rate determined by the
Remuneration Tribunal for Band A of the PEO Classification.
The Remuneration Tribunal’s amending Determination
2008/10 increased Reference Salary A in the PEO Classification by 4.3 per
cent to $132,530 from 1 July 2008. Consequently, for the purposes of the base
salary in 2008–09, the Remuneration and Allowances Regulations reduced
Reference Salary A by 4.3 per cent.
On 26 May 2008, the Rudd Government introduced the Remuneration
and Allowances Amendment Regulations 2008
(No. 1) amending the Remuneration
and Allowances Regulations 2005 to freeze the base salary at $127,060 per
annum. Rather than 100 per cent of Reference Salary A, Regulation 5 described
the percentage as:
Regulation 5 Remuneration and allowances of Senators and
Members of the House of Representatives
(2) For the financial year commencing on 1 July 2008, and for each subsequent financial year:
(a) the percentage is the percentage of the reference salary
which, when applied to the reference salary, reduces the reference salary by
the amount (in whole dollars) by which the reference salary was increased by
the Remuneration Tribunal for the financial year commencing on 1 July 2008
For the purpose of calculating the base salary, Regulation 5
had the effect of reducing Reference Salary A in the PEO Classification by the
percentage necessary to arrive at the rate payable at 30 June 2008, that is,
$127,060.
On 20 June 2011 the Remuneration Tribunal released Determination 2011/11
Principal Executive Office (PEO) Classification Structure and Terms and
Conditions which set Reference Salary A at $146,380. On the basis described
above, that is Reference Salary A less $5,470, the parliamentary base salary
increased to $140,910 with effect from 1 July 2011.
Under the Remuneration
Tribunal Act 1973,
the Tribunal had wide scope to consider factors when reviewing the PEO
Classification. The Tribunal indicated that these factors included: key
economic indicators; other specific indicators such as the Wage Price Index;
salary outcomes in the public (and to a lesser degree) private sector; the
principles of wage determination and decisions of the Australian Industrial
Relations Commission.[17]
2009–2016
In 2009 an Australian National Audit Office (ANAO) report,
Administration of parliamentarians’ entitlements by the Department of
Finance and Deregulation, highlighted shortcomings in the management of
Members of Parliaments’ (MPs) entitlements.[18] In September 2009,
in response to the ANAO report, the Government set up a committee to review
parliamentary entitlements, chaired by former senior public servant, Barbara
Belcher.
In 2011 the Government accepted the recommendation of the Report
of the committee for the review of parliamentary
entitlements to restore the power of the Remuneration Tribunal to
determine parliamentary base salary.[19] The legislation,
the Remuneration and other Legislation Amendment Bill 2011, also removed the
power of the Parliament to disallow parliamentary remuneration determinations
made by the Tribunal. The Bill passed both Houses on 23 June 2011 and received
assent on 25 July 2011, commencing on 8 August 2011.
On 15 December 2011 the
Remuneration Tribunal issued its initial report on the work value assessment of
parliamentary remuneration.[20] The Tribunal also
issued a Statement outlining its recommendations and next steps.[21] The main
recommendations included:
on the basis of a work assessment of parliamentarians, that
parliamentary base salary should be set at $185,000
On 13 March 2012 the Tribunal issued a Determination setting
the base salary of $185,000 for MPs to take effect from 15 March 2012.[22]
On 19 June 2012 the Tribunal issued Determination 2012/15:
Members of Parliament – Base salary, entitlements and related matters which
increased MPs’ base salary by three per cent to $190,550 from 1 July 2012.[23]
On 18 June 2013, the Tribunal issued Determination 2013/13:
Members of Parliament – Base salary, additional salary for Parliamentary office
holders and related matters which increased the base salary by 2.4 per cent to $195,130
from 1 July 2013.[24]
In its 2014 Annual
review of Remuneration for Holders of Public Office, the Remuneration
Tribunal determined that there would be no annual adjustment to remuneration
for offices in its jurisdiction from 1 July 2014 for one year. This included
parliamentarians and office holders as well as other principal executive
offices.[25] Determination
2014/10 Members of Parliament–base salary, additional salary for
parliamentary office holders, and related matters gave effect to
this decision.[26]
In May 2015 the Tribunal deferred the determining of an
annual adjustment until later in the year.[27] On 9 December the
Tribunal determined that all offices in its jurisdiction would receive a two
per cent increase, effective 1 January 2016.[28]
2016–
Following the 2016 review
of an independent parliamentary entitlements system the Government
commenced a major overhaul of the remuneration and entitlements framework.
The Independent
Parliamentary Expenses Authority Act 2017 established the Independent
Parliamentary Expenses Authority
(IPEA) with effect from 1 July 2017. IPEA has the role of advising, monitoring,
reporting, auditing and processing functions relating to the work expenses,
travel expenses and travel allowances of members of parliament, certain travel
expenses of former members of parliament and the travel expenses and travel
allowances of staff employed under the Members of
Parliament (Staff) Act 1984.
The Parliamentary
Business Resources Act 2017 (PBR Act) and the Parliamentary
Business Resources (Consequential and
Transitional Provisions) Act 2017 (PBR (CTP) Act) received Royal
Assent on 19 May 2017 and commenced 1 January 2018. The PBR Act establishes
the new parliamentary work expenses framework. It is a principles-based
framework to cover parliamentarians' work expenses, requiring that the dominant
purpose be parliamentary business for any expense claimed and an overriding
principle of value-for-money for the Commonwealth.
The PBR Act and the PBR (CTP) Act replaced the
Parliamentary Entitlements Act 1990 and related legislation.
On 22 June 2017 the Remuneration Tribunal announced its
decision to increase remuneration by two per cent for public offices in its
jurisdiction, with effect from 1 July 2017. This included the base salary of
MPs. In its June 2017 Statement, 2017
Review of remuneration for holders of public office, the Remuneration Tribunal stated that this
‘represents an increase of 1.6 per cent per annum over the 18 months since the
last general increase decided by the Tribunal, effective from 1 January 2016’.[29]
Remuneration Tribunal Determination 2017/12 stated
that the base salary of an MP would increase from $199,040 to $203,030 per
annum from 1 July 2017.
On 23 June 2018 the Tribunal announced an increase of two
per cent for public offices in its jurisdiction, with effect from 1 July 2018.
The base salary of an MP increased to $207,100.[30]
On 23 June 2019 the Tribunal announced an increase of two
per cent for public offices in its jurisdiction, with effect from 1 July 2019.
The base salary of an MP increased to $211,250.[31]
In April 2020, in the context of the COVID-19 pandemic, the
Government indicated it had made a submission to the Remuneration Tribunal
requesting no increase to the base salary for MPs in its annual review.[32]
Table
1: Percentage increases in MP’s base salary, 2000–2019(a)
(a) Percentage
increases based on actual dollars.
Increases to the parliamentary base
salary compared with average wages from the 1980s onwards
During the 1980s, the MPs’ base salary sat below inflation,
resulting in a decline in value in real terms. Wages at this time, however,
kept ahead of inflation and grew in real terms. By 1991, the base salary was
approximately twice that of average wages, leading to a series of catch up
increases throughout the 1990s.
Note the salary and wage series prior to 1983 is no longer
provided here due to inconsistencies in the way the earlier data series was
measured. The early series was reliant on full-time male wage earners and did
not entirely reflect women’s earnings. Base salary of MPs for these earlier
periods can however be found in the previous
version of this paper. The change to the selected series has also resulted
in updates to the base salary to average wages ratio (see far right column,
Table 2) with a notable widening of the gap.
In March 2012 MPs received a significant increase to their
base salary of 31.3 per cent, resulting in an allowance to average wage ratio
of 3.4. A subsequent increase in July of that year led to the ratio hitting its
highest level in over 35 years, at 3.5 (this timeframe covers the data series
for average earnings of all workers).
A freeze on MPs’ base salary during 2014 and 2015 had
minimal impact on the gap with average weekly earnings, reducing it by 0.1 of a
percentage point. Since 2014, the ratio has been stable at 3.3, with a slight
reduction expected due to the freeze in MP’s base pay requested by the
Government in April 2020.[33]
Table 2: MP’s
base salary compared with average wages, 1983–2020(a)
Annual
allowance
($ per
annum) |
Total
average wages (persons)(b)
($ per annum) |
Ratio -
allowance to
average
wages |
| Year |
Date of effect |
Current
prices |
Real prices
(Dec 2019)
dollars)(c) |
Current
prices |
Real prices
(Dec 2019)
dollars)(c) |
| 1983 |
6.10.1983 |
40,156 |
131,071 |
16,231 |
52,979 |
2.5 |
| 1984 |
1.5.1984 |
41,802 |
133,812 |
17,383 |
55,646 |
2.4 |
| 1985 |
1.7.1985 |
42,889 |
128,446 |
17,941 |
53,732 |
2.4 |
| 1986 |
1.7.1986 |
45,543 |
125,703 |
19,109 |
52,744 |
2.4 |
| 1987 |
10.3.1987 |
46,065 |
118,162 |
19,881 |
50,997 |
2.3 |
| 1987 |
1.7.1987 |
47,815 |
120,785 |
20,194 |
51,011 |
2.4 |
| 1988 |
1.7.1988 |
49,180 |
115,917 |
21,476 |
50,620 |
2.3 |
| 1989 |
1.1.1989 |
55,000 |
124,824 |
22,425 |
50,895 |
2.5 |
| 1989 |
16.11.1989 |
55,000 |
115,779 |
23,838 |
50,182 |
2.3 |
| 1990 |
1.7.1990 |
58,300 |
118,642 |
25,251 |
51,387 |
2.3 |
| 1991 |
1.1.1991 |
61,798 |
121,711 |
25,580 |
50,379 |
2.4 |
| 1991 |
1.7.1991 |
64,768 |
127,560 |
25,251 |
49,732 |
2.6 |
| 1991 |
15.8.1991 |
66,387 |
130,087 |
25,512 |
49,992 |
2.6 |
| 1992 |
17.12.1992 |
67,715 |
130,923 |
26,284 |
50,818 |
2.6 |
| 1993 |
11.3.1993 |
68,663 |
131,661 |
27,024 |
51,819 |
2.5 |
| 1994 |
1.1.1994 |
68,663 |
130,370 |
27,191 |
51,627 |
2.5 |
| 1994 |
10.3.1994 |
69,693 |
131,680 |
27,582 |
52,114 |
2.5 |
| 1994 |
15.12.1994 |
74,460 |
137,775 |
28,281 |
52,328 |
2.6 |
| 1995 |
12.1.1995 |
75,949 |
140,530 |
28,281 |
52,328 |
2.7 |
| 1995 |
6.4.1995 |
77,438 |
141,039 |
28,281 |
51,508 |
2.7 |
| 1995 |
13.7.1995 |
78,987 |
141,859 |
28,620 |
51,400 |
2.8 |
| 1996 |
7.3.1996 |
80,251 |
140,864 |
28,959 |
50,831 |
2.8 |
| 1996 |
17.10.1996 |
81,856 |
142,177 |
29,485 |
51,213 |
2.8 |
| 1999 |
7.12.1999 |
85,500 |
143,779 |
31,962 |
53,748 |
2.7 |
| 2000 |
1.7.2000 |
92,000 |
152,285 |
33,046 |
54,701 |
2.8 |
| 2001 |
1.7.2001 |
95,600 |
149,110 |
34,428 |
53,699 |
2.8 |
| 2002 |
1.7.2002 |
98,800 |
149,877 |
35,653 |
54,085 |
2.8 |
| 2003 |
1.7.2003 |
102,760 |
151,917 |
37,614 |
55,607 |
2.7 |
| 2004 |
1.7.2004 |
106,770 |
153,929 |
38,657 |
55,731 |
2.8 |
| 2005 |
1.7.2005 |
111,150 |
156,364 |
40,888 |
57,521 |
2.7 |
| 2006 |
1.7.2006 |
118,950 |
160,908 |
42,739 |
57,815 |
2.8 |
| 2007 |
1.7.2007 |
127,060 |
168,351 |
44,762 |
59,309 |
2.8 |
| 2008 |
1.7.2008 |
127,060 |
161,183 |
46,144 |
58,536 |
2.8 |
| 2009 |
1.10.2009 |
131,040 |
163,906 |
47,896 |
59,908 |
2.7 |
| 2010 |
1.8.2010 |
136,040 |
165,009 |
50,946 |
61,795 |
2.7 |
| 2011 |
1.7.2011 |
140,910 |
165,058 |
52,933 |
62,004 |
2.7 |
| 2012 |
15.3.2012 |
185,000 |
215,185 |
53,897 |
62,691 |
3.4 |
| 2012 |
1.7.2012 |
190,550 |
220,537 |
54,914 |
63,556 |
3.5 |
| 2013 |
1.7.2013 |
195,130 |
220,565 |
57,615 |
65,125 |
3.4 |
| 2014 |
1.7.2014 |
195,130 |
214,109 |
58,553 |
64,248 |
3.3 |
| 2015 |
n/a |
195,130 |
210,922 |
59,278 |
64,075 |
3.3 |
| 2016 |
1.1.2016 |
199,040 |
213,362 |
59,737 |
64,035 |
3.3 |
| 2017 |
1.7.2017 |
203,030 |
213,117 |
61,473 |
64,527 |
3.3 |
| 2018 |
1.7.2018 |
207,100 |
212,965 |
62,954 |
64,737 |
3.3 |
| 2019 |
1.7.2019 |
211,250 |
213,826 |
64,544 |
65,331 |
3.3 |
| 2020d |
n/a |
211,250 |
211,250 |
65,540 |
65,540 |
3.2 |
(a) Wages growth to
Nov 2019 and published MPs’ base allowances to July 2019.
(b) Average
weekly wages annualised (then
adjusted to real prices).
(c) Current
prices adjusted for inflation using Consumer Price Index (CPI) to Dec 2019 prices (Parliamentary Library calculations).
(d) Anticipated
freeze of base salary at 2019 level.
Sources:
Graph 1: Base salary for members of
parliament and average weekly wages index—real terms
Notes
- Graph 1 provides data until April 2020, but the axis labels are
set to show every two years from Oct 1983.
- The previous graph published in this paper provided a longer time
series for MP’s base salary compared to average weekly wages (real terms), but
was predominantly based on full-time male wage earners. The data shown here has
been updated to reflect total persons average weekly earnings. This change has
resulted in a different starting point for the graph, which the index has been
updated to reflect.
Tables 1 and 2, Graph 1
and commentary on the MPs’ base salary and real wages provided by the Statistics and Mapping Section.