Tuesday, 5 September 2006
Remuneration and Allowances for Holders of Public Office and Members of Parliament
Motion for Disapproval
- That clause 2.2 of Determination 2006/11: Remuneration and Allowances for Holders of Public Office and Members of Parliament, made pursuant to subsections 5(2A), 7(1), 7(3), 7(3D) and 7(4) of the Remuneration Tribunal Act 1973, be disapproved.
The reason that I have moved this motion is that the government announced a hike in the payment to members of parliament quite late on the Friday afternoon after we last left this place. In doing so, they gave recognition to the fact that it is wrong. They did not bring it in here or announce it during the Senate or House of Representatives sittings but waited until we were all on our way home—or at home—and then announced the deliberation of the so-called Remuneration Tribunal. The Remuneration Tribunal has made two determinations on pay rises. The first was No. 9, which was made on 23 May and was for a 2.5 per cent rise for MPs, and the second was made on 20 June and was for a 4.4 per cent rise. These came into effect on 1 July because of the government’s motion and were effectively retrospective. This motion of disallowance is dealing with that 4.4 per cent rise, the second rise, and would, if successful, leave MPs with the 2.5 per cent increase.
Effectively what the government announced was a seven per cent pay rise. The latest pay increases would put the Prime Minister’s salary up by more than $20,000 to about $309,000, and the Leader of the Opposition’s salary would go up by $14,000 to about $220,000. It is very easy to roll these figures off our tongues, but I want to put that $20,000 pay rise for the Prime Minister into context. There was an article in the Sunday Tasmanian a couple of weeks ago about cleaners who come in at night and clean offices, including those of state and federal MPs. Those cleaners would be lucky, for all their work, to go home with $20,000 for the year, let alone a $20,000 increase to $309,000. It is very easy for us to line ourselves up against the extraordinary emoluments and payments to CEOs, which are outrageous by any standard in our society and are multiples of what the average worker takes home—they cannot be justified—but, to gauge how MPs representing average citizens are paid, we should be looking at what the average wage is rather than looking at the top end of the bracket.
Ministers will take home an extra $13,455 and backbenchers an extra $7,800. The series of pay rises will deliver MPs increases totalling 18 per cent over the last three years, according to a Financial Review article in which Mark Davis said that this represented annualised pay increases of six per cent, well ahead of the general wages growth, which has been running at about four per cent. So this is up 50 per cent, in percentage terms, on what the average Australian has been getting. The pay rise is also well ahead of inflation, which is running at about three per cent. So it is double the inflation rate. Over the years from 1996 to this year, while the consumer price index has risen by 23.2 per cent, MPs’ salaries have risen by 39.1 per cent—almost double that.
The decision to apply Remuneration Tribunal determinations to MPs is made by the Minister for Employment and Workplace Relations, Kevin Andrews, and there is no doubt he would never do anything without the Prime Minister vetting it. He also has the power to set MPs’ salaries. It is not, as is commonly thought, the power of the Remuneration Tribunal. The minister considers what is said by the Remuneration Tribunal—which I think is slavishly adherent to government policy on these matters and not independent at all—but it is up to the minister to rectify decisions coming out of the tribunal which are unfair to Australians in general, as this decision has been.
At the same time as the seven per cent pay rise was approved for MPs, 1.6 million Australians on the minimum wage had their wages frozen, effectively, due to a delay of four months in the annual wage rise, which is now determined—under the iniquitous industrial relations legislation of the government—by the Fair Pay Commission. Fair, my foot! This is unfair. It is not right. Obviously politicians have found a way, through the Remuneration Tribunal, to keep moving ahead of the pack. At a time when the government’s own industrial relations legislation has put the brake on a fair go for families, for low-income earners and for medium-income earners, here we have the government putting a foot on the accelerator for politicians. It just is not right.
It is in the ability of the Senate to disallow this increase. My motion does not say, ‘Cut the seven per cent’; it says, ‘Put it back to 2.5 per cent,’ which is as close as possible to both inflation and the consumer price index, even though it is moving ahead of what low-income earners get—in percentage terms, not dollar terms. As I said before, just the increase in the Prime Minister’s salary is equivalent to the annual income of people on very, very low wages after 10 years of the Howard government. It is unfair. I know we will have calls from the opposite side of, ‘If you don’t like this, don’t take it; give your money back.’ If the disallowance motion fails, I can assure you I will be putting this extra money back into the community. I do not think it is right. I do not think this should be done in this fashion. I know that politicians feel very vulnerable with regard to debates like this, but the public has a right to have us debate and justify pay rises like this which accelerate us ahead at a time when the rest of the community has to deal with much more meagre increases indeed.
Labor opposes the motion moved by Senator Brown to disallow the Remuneration Tribunal determination on this matter. Labor have had a consistent policy over a long period that determinations regarding politicians’ pay and conditions ought not be made by politicians. I think it is a very sound principle. It is one I have argued for for about 30 years in a number of employment contexts. The people who are being paid the wage ought not be involved in the determination of what that appropriate wage is. I think it is a principle that this parliament should continue to reassert. Whatever one thinks about the Remuneration Tribunal decision, the fact is that we set up an independent body to make decisions about these things. We set up an independent umpire to determine these things.
I regret the government’s attack on independent umpires more generally as represented by changes to the workplace laws. It will be interesting to see whether they are consistent in their industrial relations approach today in comparison to the industrial relations approach they have taken for other workers in this country. But the Labor Party is consistent, and our position is that these things ought to be determined by an independent tribunal at arm’s length from the parties that makes proper determination having heard the evidence. While there might be some cheap political points from saying people voted for a pay rise et cetera, the Labor Party will take the same position we have always adopted in recent times about these things, and that is that the determination of the tribunal should not be interfered with by politicians.
As I understand it, the effect of Senator Brown’s disallowance motion is a bit more complicated than he thinks. I am informed that, by supporting the disallowance motion, 90 senior public officials will also have their salaries reduced. I also understand that the effect of this disallowance is quite convoluted. Nevertheless, the principle at stake, as Senator Brown is arguing, is that parliamentarians ought not get the full benefit of a determination by the Remuneration Tribunal. That is the core issue. As I have said, it goes against the fundamental principle that Labor supports, which is that the salaries of parliamentarians and other remuneration matters ought to be set by the independent body, the Remuneration Tribunal. That principle is unambiguous. I think it is generally accepted in the community that that is true for other groups—that they do not set their own salaries.
I know there is a great deal of concern in the community about directors’ fees and directors’ share offers, and the same principle applies. People do not believe that people should be setting their own remuneration. I think there are very strong reasons for us sticking to that principle. In terms of parliamentary pay, it is always easy to make a cheap political argument about whether or not increases should be paid or whether or not a particular allowance ought to be increased or what have you. I think that is a perfectly reasonable public debate to have. It is a perfectly reasonable thing for the public and others to engage in. I just think we are the least qualified people to make that judgement because we would have to declare self-interest. Everyone in this parliament has a pecuniary interest in that debate. We are the least well-placed people to make that decision.
As one knows, the argument about what politicians should be paid has raged back and forth in the community on many occasions. Some argue that we are overpaid and underworked, and others argue that we cannot attract the best people to politics because it does not pay enough. That might be a reflection on some of us already here—I will take that on the chin—but the point is that that is a debate for the community, an argument quite rightly that they are allowed to engage in. At the end of the day, we have set up a system whereby these decisions are made by an independent tribunal that looks at the conditions and movements in community standards and makes a decision.
As senators know, it is linked to a particular point in the public service salary range. It is adjusted by the Remuneration Tribunal in accordance with the principles that govern its actions. As I have said, Labor takes the view, as we have on past occasions, that we ought to let the Remuneration Tribunal do its work and not seek to second-guess or to establish ourselves as the arbiters of our wages and conditions. The motion by Senator Brown is misplaced. In its effect, it would have other consequential effects that perhaps Senator Brown has not envisaged. The bottom line is that I do not think Senator Brown should be determining the pay and conditions of parliamentarians, I do not think I should, I do not think Senator Abetz should and I do not think this chamber should. That is why we set up the Remuneration Tribunal. We ought to accept its decisions.
I want to commence my contribution to this debate by stating points of principle. Firstly, I and my party have always consistently and absolutely supported the view that an independent tribunal should determine matters of salary and allowances for parliamentarians. That means that we are very wary of a parliamentarian seeking by motion to determine an actual amount or percentage on the floor of the chamber, because that effectively means that you are not accepting the independent adjudicator’s view; you are accepting that there should be some increase and you are adjusting it accordingly.
I and my party, however, have always supported the view that these increases should be subject to tabling as a legislative instrument so that parliamentarians can express their views—and, of course, they can reject them. I think the option that should be before us is either to accept or reject an increase. It is open then for the parliament to say to the Remuneration Tribunal to think again.
I welcome this debate. I think Senator Bob Brown does us a service by bringing it on, because there is no doubt that the salary and allowances and the general conditions of employment of parliamentarians are constant issues for both the media and the public. I think it is important that parties and individuals express their point of view. There too I probably disagree with other senators from other parties in that I think that because these matters affect each senator and member individually this is the sort of issue on which there should be a conscience vote, not subject to the party whip. Frankly, it is a matter of personal belief. Some of us might think we are vastly underpaid, some of us might think we are paid just right and some of us might think we are overpaid. It is a personal opinion. I would prefer it if this were a declared conscience vote. My own party of course takes the view that every vote is a conscience vote. I am sure that they will express themselves individually on this if they so choose.
The issues put to the debate by Senator Bob Brown are a contrast with government attitudes to wage increases in other sectors of the economy. Of course, as Senator Brown is aware, the non-government senators have expressed a very strong concern and in fact have opposed the government’s Work Choices changes and the effect they may have—and we do not know how they will turn out—on individuals’ wages and conditions as determined by the new Fair Pay Commission. Frankly, this is a separate issue. This is an issue as to what parliamentarians should be paid. As Senator Evans quite rightly said, there is a debate as to whether the way in which parliamentarians are remunerated, in state and territory parliaments as well as in the federal parliament, affects the calibre, quality and type of person willing to put themselves forward for public office. It is not as easy to say that it is just a job and that if it is properly rewarded the right people will turn up, because there are all sorts of other aspects which affect public life, including very intrusive public scrutiny and media attention, a much less private life and a somewhat insecure and short-term professional life for some parliamentarians as well, with the opprobrium that can go with political life and expressing your opinion on matters politic.
I think this debate has in its background a failure of policy by the Howard federal government. I think they missed an opportunity way back in the earlier years to refer matters as a whole affecting parliamentarians’ salary packages and so on to the Remuneration Tribunal. If they had done so, I think we might have avoided some of the difficulties that we are now faced with. I refer particularly to the fact that the changed superannuation regime has resulted in new politicians—if I can describe them as such—as opposed to former politicians who were there before that change, being effectively paid a lot less as a package than those who were there before that happened. I think that if the overall circumstances of parliamentarians’ remuneration had been addressed in a holistic manner before this we might have had a more balanced package.
I want to refer the chamber to the remarks I made with respect to these issues when the Members of Parliament (Life Gold Pass) Bill 2002 was before the chamber. There was a Senate inquiry into that and I made some additional comments to that Senate report in September 2002. I will lift some of those because I think they are germane to the points I wish to make again. I said:
Over time, the Australian Democrats, along with other Senators and Members, have called for a number of major changes to parliamentarians’ entitlements. These have included calling for a reduction in parliamentarians’ superannuation to more closely match community standards, and the cessation of parliamentarians’ retirement travel benefits.
The Senate has consistently expressed reluctance to take a policy position on these matters, claiming that these are the province of the Remuneration Tribunal. There are essentially three categories of entitlements afforded to Members and Senators. These are
- their ‘salary package’
- what they need to do their job
- their ‘retirement package’
The first includes matters such as salary and fringe benefits (car and other benefits). The second includes electorate allowances, office expenses, and staff allocations. The third includes superannuation and retirement travel benefits, including entitlements available under the Life Gold Pass.
There has long been a great public clamour for parliamentarians’ entitlements to more closely match community expectations and standards. This has been a key feature of the inquiry into the proposed Bill, with submitters overwhelmingly opposed to travel entitlements as ‘perks’ that have no place in modern Australia.
Later on in my remarks I said:
As for any employee, the salary package of a parliamentarian should be assessed, first, in terms of the work a parliamentarian does (‘work value’), and, second, in terms of each member’s specific personal responsibilities.
Other factors bear consideration. A few come to mind. There is risk—for instance, the risk of not getting re-elected, or the risk of having greater difficulties in securing employment post-politics. There are community standards and expectations, and how to assess or determine them. In assessing an appropriate salary package, what are the community standards and expectations? Then there is comparative analysis—should entitlements be affected by international or federal benchmarking?
It does seem certain that the community will not judge the appropriateness of a parliamentarian’s salary package in isolation from other entitlements. The three categories outlined above do intertwine in the public mind. The public (and many parliamentarians) do seem to have the view that when the present superannuation entitlements are taken into account, overall, parliamentarians are well paid. This is probably true for long serving backbench parliamentarians, but it is less the case for parliamentarians serving a shorter term.
The public seem less convinced that members of the Executive are paid appropriately, taking the Prime Minister and the Treasurer as obvious examples. It is striking that the salaries of ministers are far below the salaries of senior executives in the private sector, (and even some in the public sector). Service as a Minister of the Crown is a great privilege and honour, and one expects it to be accompanied by a lower salary package than commensurate work in the private sector. However, if the objective of parliamentary entitlements is to reflect community standards, the point must be made that ministerial salaries are way out of touch with salaries paid to executives with far less responsibility than ministers.
This inquiry provided support for this view. The Department of Finance and Administration advised the Committee that federal members’ salaries were lower than might be expected. It referred to Parliament’s rejection of the recommendation by the Remuneration Tribunal to increase the salaries of federal members and the consequent introduction of the Parliamentary Remuneration and Allowances Act.
Mr Brian Moore referred to the results of work value studies undertaken for both federal and state members of parliament that found that rates of remuneration for members of parliament were not equivalent to their respective levels of responsibility.
Mr Moore and the W.A. Salaries and Allowances Tribunal advised the Committee that that body had undertaken a review of the overall remuneration of state members of parliament in that state. They advised that the Tribunal had taken the view that it was more appropriate for a person to be remunerated appropriately while giving service, rather than afterwards. It had, therefore, on the basis of work value studies, awarded a salary increase to state members in return for reducing and, finally, phasing out the retirement travel benefits to which former members had previously been entitled.
Later on in the remarks that I made to that Senate report I stated:
The Australian Democrats consider that, instead of providing for compensation post service members of parliament should be paid an appropriate salary for the work they do while in office. Except for transitional arrangements on leaving office, retirement benefits should be confined to superannuation at levels in accordance with community standards.
The introduction of this Bill provides an opportunity to address more than the excessively generous retirement package available to some former members through the Life Gold Pass. I agree with the Committee that it also provides an opportunity for an holistic re-examination of parliamentarians’ salary packages and entitlements on an objective basis. Crucially, this should provide an opportunity to bring superannuation entitlements into line with community standards.
I have gone at some length through those comments because that opportunity was missed. The Howard government saw it as the remarks of a minor party senator and wandered on without doing that job. We are still in a situation where a holistic review of the total package is not available.
It does seem, however, that the message has got through, largely because large numbers of parliamentarians under the new parliamentary superannuation rules are now rewarded less as a package than politicians who were in office prior to that occurring are. Though I would not know for sure—perhaps the minister would—I have seen estimates that it can amount to a difference overall of as much as $50,000 a year. That seems a vast sum of money for people who are essentially employed on the same basis.
One of the problems we have as parliamentarians is that many members of the public are simply not aware of what we do. It is quite common for me to meet perfectly intelligent, able, capable members of the community who think that when parliament is not sitting, I am on holiday.
I will take the interjection—the minister says that I should fess up. Now and again I do go on holiday, but the fact is that they are not aware—and I do not see why they should be—of the full range of duties and so on that parliamentarians engage in.
It is true that politicians are held in low regard by many Australians, and large segments of the public are opposed to any increase in salary or allowances for parliamentarians. My own view is that if parliamentarians’ salary entitlements and allowances—and I particularly refer to those of the states and territories, because it is better at the federal level—were properly audited and were transparent and open, you would get far less aggression, as people would know exactly what is going on and what things are worth.
In general, as for every other increase or change in salary and allowances that I have observed over the years, many members of the media and substantial numbers of voters will take a negative view. They are entitled to, of course, but our situation is that we have to decide whether we maintain the principle of an independent tribunal examining these matters and, if we do, whether we then decide that they have got it wrong and that we reject it—which we should do if we feel that way.
I note, in concluding my remarks, senior reporter Lenore Taylor’s article in the Australian Financial Review of Saturday, 2 September entitled ‘Legislate in haste ...’, which states:
There is a problem politicians are worried about but dare not raise in public, an issue upon which the major parties agree but haven’t had the stomach to act.
The problem is how to undo the cuts to parliamentary superannuation made after Mark Latham engaged in some populist pollie bashing early in 2004, and panicked Prime Minister John Howard into matching him.
I will not go through that whole article, but it essentially says that an inequity was produced. I stress that the Australian Democrats supported a reduction in superannuation entitlements for parliamentarians. I also stress that we believe it is better to reward people while they have the job rather than to excessively reward them after they have left the job. That is a particular opinion we have held for a long time. But it is undeniable that the outcome of those changes has caused consternation amongst a number of parliamentarians.
I recognise that, and I understand from Lenore Taylor’s article that in fact the Remuneration Tribunal is looking again at a number of these issues. If that is occurring, and I have not got information to hand that it is or is not, I think we should take the opportunity of this debate to request the Remuneration Tribunal to take a more holistic view so that they can start to think about settling this issue down, although I do not think you can ever settle it down completely. Madam Acting President, I have circulated notice of a motion that I would like to be voted on tomorrow. I missed the cut today and I want to ask leave to get it put in the Notice Paper for tomorrow. I have circulated it, so it is in front of the chamber. I am not asking for a vote on that motion now. I am merely asking for leave to give notice now.
I thank the chamber. I give notice that, on the next day of sitting, I shall move:
That the Senate requests that, in an appropriate examination or review that is undertaken of the remuneration and entitlements of members and senators, the Remuneration Tribunal take a holistic view with respect to members’ and senators’ salary packages and allowances, what they need to do their jobs, and their superannuation entitlements.
The principal purpose of clause 2.2 of Remuneration Tribunal determination 2006/11, which Senator Brown’s motion seeks to disallow, is to set the framework for the remuneration of a range of Commonwealth public offices—the principal executive offices. The Remuneration Tribunal adjusts the maximum remuneration of each band in the Principal Executive Office structure and the reference salaries in the structure from 1 July each year. This particular determination reflects the outcome of the tribunal’s annual review of the PEO classification structure. The tribunal, having had regard for a range of factors, decided that an adjustment was justified to the PEO structure from 1 July 2006. If clause 2.2 of the determination is disallowed, Commonwealth office holders who hold PEO offices may not be able to receive pay increases that the Remuneration Tribunal considers justified. The government believes that the current arrangements for adjusting MPs’ pay, along with the pay of these PEOs, remains appropriate as it provides a mechanism consistent with that applying to Commonwealth office holders more generally.
I indicate to honourable senators that over the last 12 months the Remuneration Tribunal has made some 18 determinations. Why is it that it is only this particular determination that is being challenged for disallowance? Why is it that it is only this particular determination that is being argued against? If I might suggest, I get the whiff of some cheap populism—and, might I add, misguided populism—in relation to that. So the tribunal made some 18 determinations and we then attack only one, the one that happens to include MPs’ salaries.
But, in his rush to disallow, Senator Brown will also catch, for example, the General Manager of Aboriginal Hostels Limited. Why isn’t that person entitled to a wage increase as determined by the independent Remuneration Tribunal? For that matter, why isn’t the General Manager of the Australia Council for the Arts or the Australian Electoral Officer in Tasmania or the Chief Executive Officer of the Australian Film Corporation or, indeed, the Managing Director of Australian Hearing Services? These are all people, all individuals, that would have their pay increase as determined by the independent Remuneration Tribunal taken away from them.
Similarly, there is the Director of the Australian Institute of Family Studies or the Managing Director of the Australian Postal Corporation or the Chief Executive Officer of the Australian Sports Drug Agency or the Chief Executive of the CSIRO or the Director of the Equal Employment Opportunity for Women in the Workplace Agency or the Managing Director of Film Australia or the General Manager of Indigenous Business Australia or the Chair of the Great Barrier Reef Marine Park Authority or the General Manager of the Indigenous Land Corporation or the Director of National Parks or the Managing Director of the Special Broadcasting Service or the Renewable Energy Regulator or, indeed, the General Manager of the Torres Strait Regional Authority. There are some 90 people that would be impacted.
Before we go and overturn these determinations by an independent body, I think it behoves the mover of the disallowance motion to actually say what the Remuneration Tribunal got wrong and what would be an appropriate substitute. But there has been no such consideration, just, if I might suggest, a bit of a cheap shot because parliamentarians are always an easy target in relation to that. At the end of the day what we have is an independent Remuneration Tribunal. Senator Brown sought to suggest that it is not an independent body—but it is set up by statute. I say to this chamber and to the Australian people that the government did not make a submission to the Remuneration Tribunal in relation to this. Each year the Remuneration Tribunal, of its own volition, considers the appropriate factors and then makes a determination.
We, as a parliament, quite rightly determined that we should not be masters of our own salary and, as a result, some time ago we gave that task to the Remuneration Tribunal. You cannot pass that task to the Remuneration Tribunal and then somewhere along the way make the assertion, for a cheap populist reason, that you will not agree with that decision. If we are genuinely concerned about the pay increase, when people ask, ‘Are you going to hand the money back to the Collector of Public Moneys?’—indeed, in my home state of Tasmania, and elsewhere, certain people have tried to take a cheap shot—the response should not be, ‘We’ll spend it in the community.’ I dare say that every parliamentarian spends the money in the community—unless they put it in the bank. Indeed, that is what most people do with their salaries. To try to fob it off by saying, ‘We will accept that which we think is inappropriate,’ does not hold much weight with me. If it is so immoral, if it is so wrong, you should not be accepting it or handing it back whence it came. You should not accept it and then determine to do with it as you will. In other words, you should not accept the pay increase but on the way try to distance yourself from it.
In fact, the increase is relatively modest. There is a bit of a catch-up provision because there was a lag, as determined by the Remuneration Tribunal. In all the circumstances, not a single argument has been put forward this evening as to why the Remuneration Tribunal’s determination should not be accepted. Indeed, not a single argument has been put forward as to why this particular determination is the standout of the 18 determinations the tribunal has made over the last 12 months and why only clause 2.2 should be knocked out in this circumstance.
Of course, even if you knock out only clause 2.2, Senator Brown is clear-felling the wages of a whole lot of people rather than undertaking the selective logging task of just trying to pin the parliamentarians. Senator Brown’s disallowance motion is ill conceived. He should explain to the general manager of Aboriginal Hostels Limited why he or she is not entitled to the pay increase. He should explain that to the 90 or so others in this particular band who have also been given a pay increase. Unless there is a cogent reason, a cogent argument, which we did not hear in the disallowance motion, I would suggest to all honourable senators that the determination by the independent body, the Remuneration Tribunal, be allowed to stand. I think that is the best way for the community to have a degree of confidence in the setting of parliamentary salaries.
It would be a retrograde step if from year to year we were to move in this place that we get either a wage increase or a wage decrease at the whim of a particular senator. It is important to leave the decision with an independent body. That is what the parliament has determined, and it has served us well. There is nothing untoward about this determination or, indeed, the Remuneration Tribunal’s other 18 determinations this year. As a result, the determination should stand.
We are facing a very difficult decision in this place today. I was one of those—as, I recall, was Senator Brown—who agreed that parliamentarians should not be setting their own wages and that it made sense for our pay to be linked to a public service position. You could argue about the level at which we might have been linked but, nonetheless, the idea was that we would not be responsible for determining when and if we were to receive wage increases. In that sense, we have a system which works reasonably well.
Our dilemma this time, however, is that the increase would appear to be out of proportion to wages generally and the CPI. In fact, it is more than double the CPI and it is almost double wage price indexation. That presents us with a real difficulty. We say the Remuneration Tribunal are the body that should determine this but, when they come up with an answer which is clearly out of step with what is going on in the community, that gives us a difficulty. We will be pilloried in the press and we will be criticised by members of the community, regardless of our vote. If we vote against this disallowance motion, we will be challenged to put into a charity the money that we would otherwise not have received. Maybe some of us will do that; I do not know. If we vote against this, we will be seen as greedy and self-serving.
The problem for me is that, over the last few years, we have seen great benefits flow to those who are on higher incomes. I regard parliamentarians as being on high incomes. As I said, I doubled my salary when I became a parliamentarian, because I was a mere teacher when I came into this place. There are people who do quite responsible jobs and receive around half the wage we receive.
Senator Carr says I am wrong. Maybe I am wrong now, because, fortunately, teachers’ wages have increased since I was in the profession. That is a good thing—a worthy and proper thing—because teaching is one of the most difficult jobs there is. We have also seen, over the last short while, massive tax cuts for parliamentarians. No doubt, others too noticed that there was a lot more in their monthly pay packet on 1 July than there had been in the past. We have also been given a very substantial handout in our retirement benefits. If we retire at age 60, no tax will apply to the benefit we derive from superannuation.
That is also, I think, the community’s understanding of what is going on in industry. We have seen massive increases for CEOs of businesses. Even businesses that go really badly—that show a loss at the end of the day—seem to still reward their CEOs. So I am uncomfortable with an increase which is out of step with community expectations. I should not say ‘community expectations’, because there are many people who think we should not be paid at all or even that we should pay for the privilege of being in this place and that we do not deserve a decent wage at all. I also agree with my colleague who said that ministers, because of their responsibility, are underpaid in some people’s eyes, because you can compare them with business managers, who probably do not even make such substantial decisions. I would argue that we all in this place make substantial decisions. Even to decide on this disallowance is a substantial decision. So we do have a great responsibility in this place. If you were to argue that we should be rewarded appropriately for that, that is one thing; but, of course, on the other hand it is also a great privilege to be in this place. One can understand that in those jurisdictions where there were no wages for parliamentarians because the reward was the job—and that used to be the case in quite a few countries—that then attracted wealthy people to the role. So this is a complex issue.
It is problematic as well that, because of our links with public servants, to disallow this is to also disallow the increase for those public servants. Having not been party to the reasoning by the Remuneration Tribunal, I am certainly at something of a disadvantage. The minister says this is about catching up with a gap. If you look at the schedule of increases over time, it is hard to see that gap emerging. We have consistently tracked at a higher rate since being linked with public service wages. We have consistently tracked at a higher rate than CPI or wage price indexation. So I cannot see the sudden leap that the minister says explains why this was necessary and explains why this is a seven per cent increase and not a four per cent or a three per cent increase. I will continue to listen to the debate and will be in a position, I hope, to make up my mind by the time we come to this vote. Just to reiterate, this is a difficult question. I am pleased that my colleague has put a motion forward calling for a more holistic review, if you like, looking at entitlements across the board, because I think that is necessary.
I recall the debate about superannuation. We said it was not good enough just to ask the tribunal to reform the parliamentary superannuation system, because the tribunal will, more or less, keep with the current entitlement regime. They needed to be instructed at that time, we argued—and I still stand by that. The tribunal will effectively maintain the status quo but increase entitlements over time. With superannuation, what we were calling for was a major reform. We argued that the government would need to take the step of giving that very strong instruction. It did not happen. We had a kind of reform which affects those people who come into this place after the decision makers have already made the decision but it does not affect them. But that is another story. I am expressing my thoughts on this bill and my difficulty with dealing with the decision making associated with it. I would much sooner have seen this increase more in line with wage price indexation; even CPI would have been sufficient I think. I will leave it at that. I will continue to listen to the contributions to this debate. My guess at this stage is that I probably will not support the disallowance.
I want to contribute to this debate as well because I think there are some wider issues that do need to be put into the mix and to be recognised in the wider community. There have been valid arguments put both for supporting this disallowance and for opposing it. I think that should be acknowledged. We should take the name-calling opportunities for either side out of it. The base issue here is the most recent determination, which this disallowance goes to, provides a seven per cent increase for federal parliamentarians plus flow-on increases for people with various positions such as committee chairs, ministries et cetera. It takes the base pay to just under $119,000 per annum. That rise is certainly significantly more than the CPI. It is a valid and understandable principle to state that the Remuneration Tribunal should set politicians wages rather than the politicians doing it. That is a very wise and sensible approach.
Nonetheless it does have to be acknowledged that we do still have the power as a parliament to reject that determination by the tribunal. Certainly, according to the research note put out by the Parliamentary Library on this topic—and it is on the internet, so I would suggest that anybody interested look it up; it gives useful background information—entitled The annual allowance for senators and members, parliament has in the past resolved to disapprove determinations by the Remuneration Tribunal, which has been in existence since 1973. The parliament disapproved the tribunal’s determination in 1974 increasing the annual allowance. According to the Remuneration Tribunal report from 1999-2001, in the 30 years of operation of the tribunal the parliament has also modified determinations, postponed increases and enacted reduced allowances previously determined by the tribunal as an exercise of wage restraint. The precedent is there, but I think it is wise for all sorts of reasons not to go dabbling around in it terribly often—and ideally not at all. There is an issue—and it is something that I think it is appropriate to clarify; it was not quite clear from the way the minister was telling it—about the flow-on effects to other positions. Certainly there is an issue that this disallowance does also affect the pay rates of people in other positions, such as those positions that the minister read out. That is a valid issue to take into account. I am not sure if Senator Brown is able to deal with that issue in his summing up remarks.
I also want to note the wider issue of current income levels of people in the general community. Obviously, it is desirable for parliamentarians not to determine our own pay rate, because it is understandable that people would assess that we cannot do so objectively. It is also worth noting the real context of pay rates for people in the general community and some of the flow-on issues, such as where the different tax levels kick in and other various allowances. It is, of course, no secret that there is a genuine and well-held belief by many people, myself included, that there is a significant prospect of many people in the Australian community having their pay rates—and that includes other flow-on allowances—being significantly reduced because of changes in the workplace relations laws in recent times.
I think there is also a need to just be more realistic about what most Australians are actually paid. I particularly wanted to speak in this debate because there is an aspect in a lot of the media commentary about pay levels that creates an impression that people who earn $70,000 or $80,000 are, pretty much, average wage earners and around about the middle of the pack. It creates an impression amongst a lot of people in the community who do earn that amount that that is where they are—around about the middle of the pack—and that most people earn that amount and it is not really all that much. I think it is important to put on the record that, according to the most recent statistics from the ABS that I was able to get, the number of people that earn over $104,000 per annum is less than four per cent. Only four per cent of people in the paid workforce earn over $104,000. Federal parliamentarians, with this pay allowance, will be on $119,000, so we are talking about being in the top two or maybe three per cent of wage earners in the community.
I am not against federal politicians being reasonably well remunerated. I think there is a reasonable principle there and I do agree with the comments that have been made that, certainly, senior ministers and the Prime Minister could merit being paid significantly more. I think there is probably a discrepancy between the work levels of your average parliamentarian as well, which makes it difficult to determine so-called merit and productivity principles and all of those sorts of things. But the simple bottom line is that it is a very small minority of people who earn a six-figure annual salary, and I do not think that is recognised adequately in community debate. I have to acknowledge that I am on record in this place in the debate regarding superannuation—I actually gave evidence on behalf of the Democrats to the Senate committee examining that legislation—and my view was that the general pay rate for federal politicians was adequate. That was even with the removal of the excessively—and some would say obscenely—generous superannuation entitlements which were then being sought to be removed. So, to have a significant leap at a time when many people, particularly those in less secure or part-time jobs or those who rely on allowances and bonuses, are at risk of significant reductions in their take-home pay is, I think, less than ideal for a whole range of reasons.
It is also worth putting on the record the actual average incomes. Personally, I believe the better measure when looking at average income is the median income of Australian wage earners rather than the mean, which is what is usually used when people talk about average weekly earnings in the mainstream media. The mean average weekly earnings for people in full-time jobs is about $55,000 a year, on the most recent statistics. For all workers, full-time and part-time—of course, many people are not able to obtain full-time work—that drops to $42,000. But the median, which is the midpoint—which means half the people earn less than that—of all people in full-time work is only $900 per week, or less than $47,000 per year. If you take that to include all people in all paid jobs, full or part-time, it drops to $36,500. So half of all Australians in paid work earn less than $36,500 a year. I think we need to be using those figures much more as reference points when we consider issues like tax scales, pay rates and pay levels. Only half of all Australians in paid work earn more than $36,500 a year, and it is about 3¼ times that to get up to the level we are talking about for federal parliamentarians. I think those sorts of discrepancies are problematic when you are looking at issues of equality in society.
Of course, statistics can always be misleading, and there are factors of dual-income households, people consciously choosing to be in part-time work and all sorts of other things. I recognise that there are always different factors you can put into play. But the bottom line is that the majority of Australians earn a lot less than is generally assumed, given the way average earnings figures are talked about in the mainstream media. The percentage of Australians who earn the level of salary that we are now talking about here is a very, very small minority. I think we should recognise that. We are talking about all of us being in the top two or perhaps three per cent of income earners in the country.
I am not into gratuitous politician-bashing for the sake of it, but I do think that we need to at least have a realistic perspective of where things sit with regard to all Australians, let alone the average Australian, when we are having debates like this.
I thank all senators for their contribution to the debate on this disallowance motion. Senator Murray had it right in welcoming this debate. One of the things that has motivated it was the announcement—effectively, by the government—of this pay hike after we had left parliament last time so that the parliament could not debate it. It would be very healthy if these pay rises were announced on the Monday at the start of a sittings so that any MPs who wanted to could contribute to the debate in a more satisfactory way.
Senator Evans drew attention to the fact that some 90 senior public servants would also have their pay rises of seven per cent knocked back to 2.5 per cent. The same arguments that Senator Allison and I took up pertain here. If you look at the pay rises for MPs this decade—including since we have been tied with senior public servants—you will see they are double the wage price index or the CPI. We have not said, ‘Abolish the two rises we have received’; we have said, ‘Hang on to one but jettison the other,’ because it would bring us back much closer to the consumer price index. I do not think that will do any great harm to the senior public servants who are involved. Senator Abetz clearly does not know the rules applying to disallowance motions. You either take the regulation as a whole and reject it or accept it. It is a blunt instrument.
Those are the rules and we cannot alter that. If we could, I perhaps would have sectioned off the senior public servants from the MPs. I do not know. I have just given a good argument as to why they should be included and given a 2.5 per cent pay increase instead of a seven per cent increase. It is a specious argument. It is not a civilian shield argument, it is an executive officer shield argument that Senator Abetz and Senator Evans were bringing forward. Senator Abetz said, ‘There are 18 determinations; why is only this one being challenged for disallowance?’ He should wait for the next five minutes, because the outrageous increase in printing allowance that is coming next will also be the subject of a disallowance motion of not just the Greens but also Labor and the Democrats.
Senator Abetz then went on to say that the mover—that is, me—should say what the Remuneration Tribunal got wrong. Where is the Remuneration Tribunal’s argument? Senator Abetz has not produced it. Nobody in this chamber has seen it.
Yes, I know. But, if you look at it, you will see that it is not reasoned, it is not available and it does not explain why MPs should be getting a pay increase double that of the general populace. It is not there, it is not explained and it is not justified. Let me say again: in my opinion, a politicised organisation ought to give such an explanation, but it has failed to do so. I think it would be a very healthy thing if the current members of the Remuneration Tribunal were replaced. I think they have been there too long, and I think it would be healthy if there were a regular turnover so that they did not look to the government to feel comfortable when they are bringing down deliberations on what MPs, from the Prime Minister down, should be getting in terms of remuneration. Senator Abetz said that most MPs spend their salary in the community. If he is meaning that they do not go shopping outside Australia in the main, I guess that is correct. But if he is meaning that most MPs spend their salary on the community—that is, helping other people in the community—that is simply a nonsense. It does not happen that way.
I value, as I say, the contribution of all senators. However, I think it is important that this matter is debated. Before I sit down, I would like to point out that staff of all of us have been negotiating for a parliamentary pay rise. It has been stalled for months. Under the current government offer, a quarter of them would actually go backwards and not receive a seven per cent increase. I do not think they are satisfactorily paid, and I think many MPs would agree with me on that. I think we should be speaking up for them. The average wage of the people who work for us is less than half of our wage, if you do not add the electoral allowance and so on. They also work very hard. We employ them because they are intelligent and they have great skills. They could all be in the private sector getting more money but, effectively, they are serving the public as well. I am very unhappy with the fact that those pay talks have stalled and that such a miserly attitude is being taken to the proper remuneration of people who work very long hours and contribute greatly to the input we have in debates just like this. I recommend this disallowance motion to the Senate.
That the motion (That the motion (Senator Bob Brown’s) be agreed to.) be agreed to.