The Government has established a remuneration environment that attracts and retains the best people in the Commonwealth public sector and that meets high standards of accountability.

The amendments to the Remuneration Tribunal Act 1973 that are proposed in this Bill, support this policy objective. They go to clarifying the respective roles of the Tribunal and the responsible Minister in relation to principal executive offices.

Under the Remuneration Tribunal Act, principal executive offices fall outside of the Tribunal's determining jurisdiction.

The Tribunal can provide advice on their remuneration, but has no authority in this area.

In the Public Employment (Consequential and Transitional) Amendment Act 1999, the Parliament decided to expand the functions of the Remuneration Tribunal to allow it to determine a classification structure for principal executive offices.

This change was an important step in improving and reforming executive remuneration in the Commonwealth.

It was designed to encourage employing bodies - to the greatest extent possible and appropriate in a public sector context - to engage in productivity-based bargaining with their employees.

Allowing the Remuneration Tribunal to set a framework ensured that these negotiations would take place within appropriate parameters and with consistent reference points across decentralised authorities.

The Remuneration Tribunal issued a classification structure on 7 December 1999. It was tabled in this House as Determination 1999 Number 15 on the same day.

The classification structure for principal executive offices consists of five remuneration bands, with broad rules and defined boundaries.

It allows for a total remuneration approach, with limits for annual variations in remuneration and productivity-based bargaining.

Its detail mirrors in many ways the arrangements that were put in place by the Tribunal for Departmental Secretaries in early 1999.

It is a good framework, but legal advice suggests it is one that an employing body can ultimately choose to disregard, because of the wording of the amendments to the Remuneration Tribunal Act last year.

The Government wishes to rectify this situation through the amendments contained in this current Bill.

Following discussions with the Remuneration Tribunal, the Government has decided to take forward changes that enhance the role of the Tribunal in relation to the classification structure and to spell out clearly the process for translating public offices into the structure.

These changes improve the accountability of setting and reviewing the remuneration of principal executive offices. They also reinforce the Tribunal's decision-making and coordinating role in the remuneration of Commonwealth public office holders.

The impact of the amendments include:

1. Giving the Minister for Finance and Administration the responsibility to make declarations for principal executive offices.

The Governor-General previously created principal executive offices through regulation. There are currently 11 principal executive offices. The Government hopes to increase this number significantly. Because of the large volume of offices involved, we believe that allowing the Minister to declare an office, with notification through the Commonwealth of Australia Gazette, is a better way of transacting this reform.

2. Giving the Minister for Finance and Administration the power to declare the employing body and the classification band or level in the principal executive office classification structure to which the office will be assigned; as well as the power to set the commencing remuneration for the office.

This is designed to improve accountability. It also ensures that in the translation of public offices into a total remuneration environment, the starting point is set explicitly.

3. Giving the Minister for Finance and Administration the power to assign an office into a particular classification temporarily, and/or to identify a level of commencing remuneration that is person specific.

This will help to deal with anomalies that may arise because of existing person-specific loadings, benefits or allowances, which are not relevant to an office in the long-term. It is designed to ensure that the market position of that office is not distorted.

4. Providing that the Minister for Finance and Administration must consult with the Remuneration Tribunal in creating a principal executive office and making the decisions mentioned above.

This reinforces the Tribunal's coordinating role on the remuneration of public office holders. It is consistent with the advisory role the Tribunal plays in relation to Departmental Secretaries and Heads of Executive Agencies under the Public Service Act 1999.

5. Providing that an employing body cannot determine terms and conditions for a principal executive office that are inconsistent with the broad rules and defined boundaries established by the Tribunal.

An employing body can only put in place arrangements that are inconsistent with the classification structure for that position when it has gained the written consent of the Remuneration Tribunal.

The Bill also contains provisions to ensure that the arrangements that are in place for existing principal executive office holders before the commencement date for these provision are not affected by the provisions of this legislation.

I commend the Bill.