The base salary for senators and members: 2020 update

29 May 2020

PDF version [346KB]

Cathy Madden, Deirdre McKeown, Politics and Public Administration Section
Penny Vandenbroek, Statistics and Mapping Section

 

Contents

Introduction

Constitutional and legislative basis for payment

Remuneration Tribunal

Parliamentary base salary—a brief history

1901–1973
Remuneration Tribunal
Reference salary—under the PEO Classification
2009–2016
2016–

Percentage increases in the base salary from 1996

Increases in the parliamentary base salary compared with average wages from 1968

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.

The base salary for senators and members is $211,250 per annum from 1 July 2019

The applicable Principal Remuneration Tribunal Determination is Remuneration Tribunal (Members of Parliament) Determination 2019.

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)

Percentage increases in MP’s base salary, 2000–2019

(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

Table 2 (cont)

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)
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

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.


[1].   The choice of phrase to describe the allowance payable under Section 48 of the Constitution is a difficult one. ‘Basic salary’ is commonly used in an informal sense and serves to distinguish it from salaries paid to ministers and office-holders. The authors have chosen to use ‘parliamentary base salary’. Federal parliamentarians are also entitled to other benefits and allowances described in legislation. For the previous entitlements framework see C Madden and D McKeown, Parliamentary remuneration and entitlements: 2016 update, Research paper series 2015–16, Parliamentary Library, 2016. For the current framework see C Madden and D McKeown, 2019 Parliamentary remuneration and business resources: a quick guide, Research paper series 2019–20, Parliamentary Library, 2020. All hyperlinks correct as at 4 May 2020.

[2].   Parliamentary Business Resources Act 2017.

[3].   Parliamentary Business Resources Act 2017, section 45.

[4].   Remuneration Tribunal, 1982 Review, The Tribunal, Canberra, 1982, pp. 18–21 and Report 1999/01, The Tribunal, 1999, pp. 1–5.

[5].   S Griffith, Official Report of the National Australasian Convention Debates, Sydney, 2 April 1891, p. 654.

[6].   Official Report of the National Australasian Convention Debates, First Session, Adelaide, 22nd March to 23rd April 1897, pp. 1032–34.

[7].   Commonwealth Salaries Act 1907, Act no 7 of 1907.

[8].   E Page, House of Representatives, Debates, 4 June 1947, p. 3355. An Electorate Expense Allowance, not subject to income taxation, was paid from 1952.

[9].   Including: 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; Salaries and Allowances of Members of the Parliament of the Commonwealth: A Report of Inquiry by Mr Justice Kerr, (Kerr Report), 1971.

[10].   Mr Justice Kerr, ibid., p. 12.

[11].   Ibid., p. 16.

[12].   With the enactment of the Public Service Reform Act 1984, the Second Division of the Commonwealth Public Service was replaced by the SES. See Public Service Reform Bill 1984, Bills Digest, 72, 1984, Parliamentary Library, Canberra, p. 2.

[13].   Remuneration and Allowances Act 1979.

[14].   Remuneration Tribunal, 1987 Review, pp. 5–12.

[15].   Cullen Egan Dell, Report on the pay and allowances for members of parliament: prepared for the Remuneration Tribunal, 1988, pp. 18–19.

[16].   The PEO classification structure provides a framework for the negotiation of the terms and conditions of PEO employment.

[17].   Remuneration Tribunal, Explanatory Memorandum: Determination 2004/15 – Principal Executive Office (PEO) Classification Structure Terms and Conditions. WPI is a product of the Australian Bureau of Statistics. The Tribunal’s Report 1999/01 highlights some of the factors given consideration by the Tribunal during earlier deliberations.

[18].   Australian National Audit Office (ANAO), Administration of parliamentarians’ entitlements by the Department of Finance and Deregulation, ANAO, 2009.

[19].   Report of the Committee for the Review of Parliamentary Entitlements (the Belcher review), April 2010, p. 12.

[20].   Remuneration Tribunal, Review of the Remuneration of Members of Parliament: Initial report, 15 December 2011.

[21].   Remuneration Tribunal, Reports, Members of Parliament, Secretaries of Departments, Specified Statutory Offices, Statement, 15 December 2011.

[22].   Remuneration Tribunal, Determination 2012/02: Members of Parliament—Base salary and related matters, 12 March 2012.

[23].   Remuneration Tribunal, Determination 2012/15: Members of Parliament—Base salary, entitlements and related matters, 19 June 2012.

[24].   Remuneration Tribunal, Determination 2013/13: Members of Parliament – Base salary, additional salary for Parliamentary office holders and related matters, 18 June 2013, accessed 13 August 2018; Remuneration Tribunal, Determination 2013/13 Members of Parliament – Salary statement of reasons, June 2013.

[25].   Remuneration Tribunal, 2014 Review of Remuneration for Holders of Public Office, Statement, 12 May 2014.

[26].   Remuneration Tribunal, Determination 2014/10: Members of Parliament—Base salary, additional salary for parliamentary office holders, and related matters, 14 May 2014.

[27].   Remuneration Tribunal, 2015 Review of Remuneration for Holders of Public Office, Statement, 31 March 2015; Remuneration Tribunal, Determination 2015/06 Members of Parliament – Base Salary, Additional Salary for Parliamentary Office Holders, and Related Matters, Reasons for Determination, The Tribunal, 11 May 2015.

[28].   Remuneration Tribunal, Determination 2015/22, Members of Parliament–Base salary, additional salary of parliamentary office holders and related matters, The Tribunal, 9 December 2015.

[29].   Remuneration Tribunal, 2017 Review of remuneration for the holders of public office, Statement, The Tribunal, 22 June 2017.

[30].   Remuneration Tribunal, Determination 2017/23 Members of Parliament, as at 1 July 2018, incorporating amending Determination 2018/06 Members of Parliament, 25 June 2018.

[31].   Remuneration Tribunal, Remuneration Tribunal (Members of Parliament) Determination 2019, The Tribunal, 21 June 2019.

[32].    M Cormann (Minister for Finance), Transcript of interview with Peter Stefanovic: Sky News First Edition: 3 April 2020: coronavirus economic response, media release, 3 April 2020.

[33] D McCulloch, ‘Mathias Cormann resisting pay cut for MPs’, aap, 9 April 2020.


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