We frequently receive feedback on social media lamenting that politicians are paid too much. CEFA staff are often asked many questions about our Constitution and system of government when attending social events and we always hear a whinge about pollies pay. We are told things like “our elected representatives are only doing the job for the money” and “that once they get into the Parliament they’re on the gravy train for life”.
I’m sure you’ve heard these words before too.
But did you know that the Australian Constitution contains a section about allowances for Parliamentarians? It’s found in Section 48:
Section 48 Allowance to members
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.
Until the Parliament otherwise provides…..
We see this term a lot throughout the Constitution. It means that this was what was stipulated at federation in 1901, but after that the Parliament may legislate on this matter. There is legislation on this matter now and in Parliament this week changes are being made to some of it. But let’s start in 1901.
Payments to members of Parliament was not something unique or modern at this time. Even in the early history of Parliament in England, representatives were paid. At the time the Constitution was being written the representatives in the Parliaments of the Colonies that became the Australian States were paid between £100 (Tasmania) and £300 (Queensland) per year.
At Federation payments for Parliamentarians was considered as an essential condition of democratic Government in young communities. But even at that time there was often bitter opposition to Parliamentarians being paid.
If we didn’t pay our Parliamentarians, then only people who could afford to work for no pay would be able to afford to do it. If that was the case, then the Parliament would not be representative of the community.
Was £400 a lot of money in 1901?
It certainly was. According to the ABS:
Income figures were not collected in the 1901 Census but were estimated from various sources at the time. For 1901, the mean annual income per inhabitant (including children aged under 15 years) was £46.
At federation our MP’s and Senators were earning a bit more than nine times the average annual income. These days the annual income for fulltime adults is just over $80,000 and for all employees just over $60,000. The base salary for Parliamentarians is now $199,040, which is just over three times the average employee wage. On top of the $199K there are loadings for Ministers. Our Prime Minister is paid just over half a million dollars, which is about ten time less than the CEO of Australia Post.
Some heads of Government departments are paid between one and two million dollars, which is three to six times more than the Ministers that lead those departments. Members of Parliament are at the highest level of our public service and are elected by us. They work for the community and really are there for our public service.
What are the other entitlements?
Travel for Parliamentary business is an entitlement for Parliamentarians. Of course we do need our MPs and Senators to travel to Canberra to attend Parliament and we need them to travel in their electorates to see us. We also need the Ministers to be able to travel around the country for Parliamentary business for their portfolio.
Community expectations of the conduct of our elected representatives are high. When they are asking us to tighten our belts, we expect the same of them. In fact we probably expect more from them. So when we find out that someone has taken a helicopter ride, instead of a car that would have taken the same amount of time, we are furious. Or when someone buys an apartment while on a trip that tax payers have paid for, we start wondering what is going on. We ask “why don’t they ever put their own hands in their pockets?”
The rules about entitlements are a bit vague and require discretion by Parliamentarians. Much of the time it is up to them to judge how the community will react to their spending of taxation dollars on their travel or other expenses. After the last public scandal the Prime Minister has pledged to clean up the system and make it much more clear about what can and can’t be claimed. The gold pass is also getting the axe.
The gold pass
The gold pass is a travel entitlement for some former politicians, where they are able to get ten domestic return flights per year. The scheme was wound back in 2012, which would have meant anyone elected after that time would never qualify. And now it is being scrapped for everyone except former Prime Ministers.
There was a legal challenge to the constitutionality of cutting back on post Parliamentary entitlements in the High Court last year. The former pollies lost the case in the Court and that now paves the way for the Government to cut back entitlements even further.
The pension plan
This is the main gripe that we hear about. We’re told over beers at the pub that this is the ultimate deal. The only reason people go into politics is for these benefits for the rest of their lives.
Unfortunately this urban myth is not quite right. There definitely used to be a Parliamentary pension, but just before the 2004 federal election it was closed for any new Parliamentarians. It now only applies to those already on it, and anyone who was first elected before the 2004 election who has served the required number of years to qualify. Anyone that was elected on or after the 2004 election are just paid superannuation, into their chosen fund, like anyone else in Australia.
While very few current Parliamentarians will be eligible for the pre-2004 Parliamentary pension, it is very generous. It is a lifetime pension that is paid as soon as the person leaves Parliament. This week South Australian Senator Cory Bernardi stated that he intends to amend a bill going through the Parliament to cut this back, so that those first elected before 2004 can only access this pension once they reach the age of 60. This will include already retired Parliamentarians who are currently being paid this pension.
Do you think that is the right thing to do?
A number of Independents and Greens this week moved a motion in the House that would allow tougher penalties for those misusing entitlement and for the police to be called in to examine the cases of repeat offenders. The two major parties voted against this, but they are working together to get another bill through the Parliament to set up an independent authority for Parliamentary entitlements.
There is already a remuneration tribunal which is an independent statutory body that handles the remuneration of Government employees. This is the body that decides how much politicians and public servants are paid. As we read at the beginning “Until the Parliament otherwise provides”, means that allowances paid to Parliamentarians can be altered by legislation. It is Parliamentarians who write and then pass legislation. So this independent remuneration tribunal keeps these decision about pay rises at an arm’s length.
We do need to pay our Parliamentarians
If we did not pay our MPs and Senators then only those people who could afford to work without being paid could do the job. That would mean that our Parliament would be less representative of our community.
Do you think $199K is a fair amount to be paid for this job to represent us the people as leaders of our democracy. Is this enough to attract the right people to the job? We’d be happy to hear your suggestions.