Parliamentary Remuneration (Determination of Remuneration) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 10 September 2015.)

The Hon. R.I. LUCAS (17:29): I rise on behalf of Liberal members to support the second reading of the Parliamentary Remuneration (Determination of Remuneration) Amendment Bill 2015. At the outset, can I indicate that the Legislative Council is debating this bill following its normal process—that is, the legislation passed the House of Assembly some two weeks ago, I think the bill arrived in this chamber on the Wednesday or Thursday of that sitting week two weeks ago; it has sat on the table for public debate and comment over the last 10 days or so, and we are debating it this week.

Some other legislation, such as the APY lands legislation, was introduced on a Tuesday and went through both houses of parliament by the Thursday (in 48 hours), but we will not get into a discussion about the explanation as to why that was urgent and what has happened since then, but I am just talking about process here. Unlike that legislation which went through both houses in 48 hours, this legislation was considered by the House of Assembly in one week; it lay on the table for another week and it is now being debated in the Legislative Council. There can be no criticism, as sometimes there has been in the past, that members of parliament in the secrecy of the night have shepherded through a bill not following the due process in 48 hours or 24 hours or whatever the accusation might be.

The background to this bill, Mr President, as you would well know, is that the Premier over the last 12 months or so has made a number of public statements relating to the issues in relation to MPs' remuneration, including some public statements in relation to MPs' superannuation. The first of those statements I think was made in the Governor's speech in broad terms in relation to remuneration and, subsequently, the Premier has made a number of public statements, as I said, in relation to remuneration and superannuation since then.

The bill before us is the end product of the deliberations of the Premier and the government on these issues. The bill has been considered by the Liberal Party and, whilst it is more limited in terms of its scope than it might have been in some of the earlier indications, the Liberal party room has considered the bill and, as indicated by the debate in the House of Assembly, we have indicated our support for the passage of the remuneration bill and the Lobbyists Bill and, as I said, we will subsequently debate the statement of principles in both houses of parliament as well.

The issue of MPs' salaries and remuneration is always controversial. Unlike others, I have seen more than 30 years of debates in relation to MPs' remuneration and superannuation.

The Hon. J.S.L. Dawkins: Since Westies last won the premiership!

The Hon. R.I. LUCAS: Indeed, in 1983. I have seen all sorts of arguments over the years in relation to remuneration. The one constant is that whenever it is discussed there is no doubting that the overwhelming public view is that members of parliament are overpaid, underworked and do not deserve whatever improvement in remuneration might have been contemplated by whichever government happened to be in at any point in time, whether it was a Liberal or Labor government.

In recent years, for most of the members in this chamber who have only been here in the last few years, they will recall the recent history of MPs' salaries in South Australia—that is, we were originally linked by way of a nexus with federal MPs' salaries where whatever the federal MP salary was, the South Australian MP salary was $2,000 below the federal salary.

In 2011-12, we had a debate in this chamber, which many would have participated in, when, rightly or wrongly, we voted to increase that nexus from $2,000 to $42,000. We all supported the increase of the difference between the salaries of South Australian MPs and the salaries of federal members of parliament; that is, instead of being $2,000 below the salaries of federal MPs, we voted to make sure that we were $42,000 below federal salaries.

Another thing that has occurred in the last two years is that in 2013 the then federal government took the decision to show the nation leadership by freezing the salaries of members of parliament. The argument was, in part, that by freezing the salaries of members of parliament we would be setting a lead of austerity and that unions and workers in the private and public sector would be encouraged to follow the bold leadership of members of parliament and either accept a pay freeze for the next couple of years or significantly reduce their salaries.

As I said, having seen these freezes come and go over 32 years, it will not surprise you to know that MPs have not had a pay increase for 2¼ years—that is, no pay increase since July 2013—and no-one in the private sector or the public sector has taken a jot of notice of the leadership position taken by members of parliament. Average wages in the public and private sector in South Australia over the last two years, for which there has been a freeze for MPs, have increased by just under 6 per cent, just over 3 per cent in 2013-14, and just under 3 per cent in 2014-15—even above the South Australian government's target of 2.5 per cent for public servants.

Having endeavoured to set the lead, over the last two years no-one has followed, and I am sure, Mr President, you will be the first not to be surprised at the fact that nobody followed members of parliament when they froze their salaries. It is a salutary lesson to prime ministers, premiers, members of parliament and others on the impact of decisions such as that one. The facts are clear in themselves and, as I said, no-one took a jot of notice but continued as they had previously to negotiate increases in their wages and salaries and their conditions over the last two-year period.

I will outline the key provisions of the bill, but one of the transitional provisions is that decisions will be taken by the Remuneration Tribunal in South Australia, but those decisions are unlikely to occur, in my view, until late this year at the earliest and possibly even early next year, and so in the transitional period the existing arrangements will continue.

I am advised that the federal Remuneration Tribunal is currently undertaking a review of the salaries of federal MPs on the basis that they have had them frozen for two years. That freeze has now finished, and the federal Remuneration Tribunal is looking at what the salary of a federal MP might be, bearing in mind that wages and salaries have increased by about 6 per cent over the last two years, and I understand that they will make a determination in the not too distant future.

The transitional provisions will mean that, because we have this nexus of $42,000 beneath the salary of federal MPs, if the salaries of federal MPs go up by $3,000 or $6,000, or whatever it might happen to be, there will be a commensurate increase in the salaries of South Australian MPs under the transitional provisions of this legislation. The base salary of a backbench member of parliament is approximately $153,000, which is approximately $42,000 beneath a federal MP’s salary.

The result of the transitional provision will mean that if the federal MP's salary goes up $3,000 or $6,000, then the state MP's salary in this transitional period will go up by that particular limit. The new arrangements will not operate until there is a decision from the Remuneration Tribunal and there is this transitional provision. The essential nature of the bill, and the Premier's argument for this, is that there is always significant criticism of MPs' salaries and benefits, but one of the more prominent criticisms, according to the Premier, has been in relation to what is referred to as 'perks of office, travel and other entitlements'.

What has driven the government and the Premier in relation to this discussion and debate is the Premier's view, which he has put publicly in radio interviews, that there needs to be an increase in the transparent basic salary for members of parliament offset by reductions in some of the benefits and allowances that are currently paid. The Premier's essential contention has been, 'Let's be transparent about this. Increase the basic salary, but by and large reduce in a commensurate way the allowances and benefits, in some part, the members currently have.' Again, that is a feature of this bill and the Liberal party room has indicated its support for the second reading of this bill.

The bill outlines a structure for the tribunal to conduct some inquiries into determinations of its own. It is essentially saying to the tribunal that there are three broad areas of current benefits or allowances that are to be the subject of work by the tribunal. The first of those is what is known as the members of parliament travel allowance, which is currently $13,300 or $13,500, about that mark per year. It is available to all members of parliament. Ministers can avail themselves of it and travel as members of parliament, as opposed to ministerial travel. Of course they have their own separate ministerial travel entitlement. Not all ministers do that, but nevertheless they have that entitlement if they so choose.

That travel allowance will ultimately be removed once the tribunal makes its final decision, and the tribunal will be asked to look at what, in its judgment, is a reasonable compensation for the removal of that benefit from members of parliament. It is for the tribunal to determine whether that number is $13,300, whether it is below $13,300 for whatever reason, or whether it is above $13,300 for whatever reason. Ultimately, the extent of the increase in the basic salary as a result of the removal of the travel allowance is a decision and a determination for the Remuneration Tribunal. I expect that the tribunal might call for submissions on that when it does its work. Again, that is an issue for the tribunal to determine.

I know from colleagues, crossbench colleagues, government backbenchers and others, that there is a variety of views in relation to the travel allowance. Publicly, there has been much criticism of travel. At the federal level, it related to a Liberal member of parliament; at the state level, it has related principally to a Labor member of parliament, without mentioning names and personalising this debate. But over my 32 years, trust me, it has involved Liberal and Labor members. In some cases, it is ministerial travel or it might be the office holder's travel at the federal level but, in some cases, it has been the backbenchers' parliamentary travel entitlement that is of public concern and whether or not value for taxpayers' money has been arrived at through the use of the travel entitlement.

The second issue which it will be up to the tribunal to determine is the issue of what we colloquially refer to as the gold pass (but parliamentary counsel has referred to it as the Metrocard Special Pass) and the remuneration consisting of subsidised or free interstate rail travel. As I said, colloquially, we understand that to be the gold pass; that is, members of parliament are entitled to free public transport in the metropolitan area and we are entitled to subsidised or free interstate rail travel, with limited access for your partner as well.

Again, there has been criticism in relation to the entitlement of MPs to free or subsidised travel through the gold pass arrangement. This bill will, from the date of the determination of the tribunal, conclude that particular entitlement and the tribunal will be asked to make a calculation as to what the compensating increase in basic salary should be for the removal of that benefit.

Whilst the travel allowance is an easier calculation for the tribunal because we know what is allocated to each member and what their entitlement is, the issue of the gold pass is obviously going to be much more difficult. There are some members, for example, who avail themselves of the free public transport and the free interstate rail travel, so they have got full value from that particular entitlement. There are others who have never used the free public transport whilst they have been members of parliament, or the interstate rail travel.

It is going to be up to the tribunal as to how they determine what the increase in the basic salary should be for the removal of the gold pass. There is an entitlement there. Each of us could travel on the Ghan once a year with our partners, I think, and we could all take up our public transport if we wish but we do not, so it is going to be up to the tribunal to make a determination. If we remove that, there is clearly a saving to the taxpayers. I am not sure what that is per year because I do not see those numbers, and the tribunal has to determine, for 69 members of parliament, what would be the increase in the basic salary as a result of that.

The third broad area is the issue of committee payments. This has been a controversial area on occasions over the years. Our federal colleagues often remind us, both publicly and privately, that we get paid for working on committees when it is just part of the work of federal members of parliament. I imagine that if my spouse was in the federal parliament and was not being paid for committee work and I was, that might be the cause of some internal tension in that domestic arrangement. I am sure it has been raised with members by their colleagues in the federal parliament as to why we think we should be paid for committee work. My answer over the years has been that they were the terms and conditions that were there when I was elected, and I am not sure how they started but they were there and long may they continue.

What this particular bill now is essentially saying is that we will mirror the federal arrangements in relation to the salary loadings that are paid to committee members, in particular—not the committee chairs, which is again a mirror of the federal arrangement. The committee chairs are paid at the federal level and the committee members are not. The tribunal will be asked to look at that and determine what is a fair offset for all members of parliament for the removal of committee payments.

Another issue, which is not outlined in the legislation, is the payment for select committees which, upon some digging, was as a result of a cabinet determination going back to the days when we used to have a chief secretary, so that means it is many decades ago. I think the original payment was six guineas per committee member; it is now $12.50. It is not going to add up to much but, in essence, the intention is for all of those committee payments to be removed. The tribunal will need to look at that and then determine what is a fair offset in terms of an increase in the basic salary.

I acknowledge that the result of that for my friends and colleagues—one or two of them in particular on the government backbench in the Legislative Council—will mean that this particular change is likely to have more impact on their terms and conditions than it will for many others. Most of the rest of us will lose approximately $15,300, which I think is the payment for committee membership.

Most members are on a committee but, as I said, because of the circumstances that exist within the government at the moment—and I will not go into those and I will not mention names at all—the reality is that a small number of people are doing a large amount of work and, because of the committee payment system, they are being recompensed under the existing arrangements.

They, as I said, will be impacted in a more significant way by this particular aspect of the government's proposal which is being supported by the opposition. The reality is that if the Liberal Party is ever in government the circumstances will be reversed and the small number of Liberal Party backbenchers sitting on committees will be similarly impacted in terms of the workload they undertake on committees and the removal of the additional benefit of payments for committee membership.

They are the three aspects that will be looked at by the tribunal. If this legislation passes this week, it will go off to the tribunal (which has already been established) and they will have to undertake their review. There is no time limit on that. It is completely up to them, as an independent tribunal, to make a determination in terms of the date of operation. The date of operation of the tribunal's decision can be backdated to no earlier than the passage of the legislation, but it may well be the date of their determination. Again, that is a decision for the tribunal to take as part of their independence and flexibility.

The other allowances that are being removed but are not being given to the tribunal to be used as an offset to increase the basic salary of members are expense allowances for the Premier and ministers of the Crown. In the Premier's case, it is about $8,000. For ministers, I think it is somewhere between $5,000 and $6,000; for some other officeholders it is about $1,000 to $3,000. Those allowances are to be abolished and there will be no offset in relation to that. So the Premier will lose that expense allowance of $8,000 and that will not be rolled into a decision for the tribunal to determine what the offset should be for all members of parliament.

Similarly, the Speaker, the Chair of Committees, the Leader of the Opposition and other officeholders who have small expense allowances lower than the Premier's $8,000 will have those allowances removed and they will not be rolled into the determination of the Remuneration Tribunal.

Those are the essential provisions of the legislation. What will be their impact? That is a decision entirely for the tribunal. I have seen media reports that they will mean an increase of $30,000 in the basic salary of members of parliament, and I am assuming that those media outlets have, in broad terms, added together the travel allowance of about $13,500 and the average basic committee payment, which is $15,500. However, again, if you average that amongst all members it would be significantly less than that, but someone has come up with this number of $30,000.

I think it is important to look at the implications so that no-one can say that anything was hidden from the debate or from the public. No-one knows what that determination will be but if, for example, it were $20,000 or $30,000—somewhere in that range—then the flow-on impact of that would be that the Premier would receive a salary increase of between $40,000 and $60,000. However, as I indicated earlier, offset against that he would have the loss of the travel allowance of about $13,500 as well as an expense allowance of just over $8,000.

If it were between $20,000 and $30,000, the Leader of the Opposition would have a salary increase of between $35,000 and $52,500; again, he would lose the entitlement to the travel allowance of about $13,500 and his expense allowance, which is just under $6,000. Ministers are much the same as the Leader of the Opposition; they are paid at the same level. That is, ministers would have a salary increase of between $35,000 and $52,500 but that would be offset against the loss of a travel allowance entitlement and their expense allowance of just under $6,000.

There is a new provision in the salary loadings which follows the federal arrangements, which is a new salary loading for shadow ministers. That salary loading follows the federal model of a 25 per cent salary loading, so the salary loadings in the schedule start at 100 per cent for the Premier, 85 per cent for the Deputy Premier, ministers are at 75 per cent, the Leader of the Opposition in the House of Assembly is at 75 per cent, and then it comes down to the Chair of Committees in the House of Assembly at 37.5 per cent. Shadow ministers would be at 25 per cent and chairs of committees and whips in and around that 18 per cent, with parliamentary secretaries at 20 per cent.

That would mean that shadow ministers, as a result of that additional shadow minister loading, would see—if the basic salary increases by $20,000 to $30,000—a salary increase somewhere between $63,000 and $75,000 offset by the travel allowance loss of $13,500 and, if that member were on a committee, the loss of $15,300 because of the loss of that particular committee. As I highlighted before, the one or two members who are currently either chairing a number of committees or who are members of a number of committees would lose significantly in terms of their current salary entitlements and the new entitlements under the government arrangements outlined in this bill.

In wrapping up, I return to what I said at the outset, that these issues are controversial in terms of remuneration. I have on many occasions, and I do so again today, defended members of parliament in terms of an expectation in relation to what a reasonable remuneration package should be for what I see as the very important job of being a member of parliament.

I had my office take out of the Auditor-General's reports for 30 June 2014 (so these figures are now 15 months out of date), and the number of public servants in departments and agencies currently earning more than $151,000 per year was 1,353. The number of public servants earning (15 months ago) more than $171,000 a year was 850. The number of public servants earning more $201,000 was 470.

I say advisedly that there might be a small reduction in those numbers because in some cases departments and agencies, when they have paid out a termination package, the end of year results take the payment of a particular public servant into a higher bracket, and not all agencies identify that issue, but that is broadly the number we are talking about: almost 500 public servants in South Australia being paid more than $201,000, more than 1,300 public servants being paid more than $151,000. The basic salary of members of parliament at the moment is $153,000. Even if there was to be an increase of $20,000 to $30,000 in the basic salary, significantly offset by the removal of the travel allowance and committee payments, there are about 850 public servants earning more than $171,000.

I am prepared, on behalf of my colleagues and all members of parliament, to defend the importance of the role of members of parliament. I believe that the 69 members of parliament have an important job in our democracy and, whilst some of us do a good job and some do a bad job, and some are criticised more often than others, the reality is that the job members of parliament undertake is important, and the argument that there are 850 public servants who have more important jobs than the 69 members of parliament and deserve to be paid more than $171,000 a year, and that members of parliament do not, is not one that washes with me and not one that I can agree with. It will not be a popular view, I accept that.

The reality of this debate over my 32 years in parliament has demonstrated that you will never win that argument publicly. But, nevertheless, I hold the view, and hold it strongly, that members of parliament are entitled to be paid well for what should be seen by the public as an important job. We are the ones who make the laws and make the decisions and have to accept responsibility for what goes right and what goes wrong, and ultimately the remuneration package that members of parliament are paid should reflect that responsibility and it should be accepted by the community.

With that, I indicate on behalf of my colleagues support for the second reading of this bill and, as I said, the support of my party for the package of measures the government has introduced in terms of both remuneration and accountability through the Lobbyists Bill and the statement of principles, which we will debate later in the session.

Debate adjourned on motion of Hon. T.T. Ngo.