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Wednesday, 28 October 1964

Senator PALTRIDGE (Western Australia) (Minister for Defence) . - I move -

That the Bill be now read a second time.

Honorable senators may recall that in April 1959, when the Government introduced legislation dealing with Ministers of State, parliamentary allowances and parliamentary retiring allowances, it indicated its view that these matters should be dealt with every three years at the beginning of each Parliament and that the decision should endure, except for some quite phenomenal or catastrophic circumstances, for the whole of the period of three years. These, of course, are matters for Parliament since, under section 48 of the Constitution of the Commonwealth, alterations in the emoluments of members of the Parliament must be made by the Parliament itself. The Government did not, in the event, bring down any proposals at the beginning of the 24th Parliament, that is, the early part of 1962, or at any time in the life of that Parliament. It is now, therefore, more than five years since the last review.

Having regard to the great changes which have occurred during this period in the rates of earning outside Parliament, and the increasing pressure of parliamentary business, the Government has decided that a review of emoluments should not be further delayed, but should be made now in respect of the 25th Parliament and to take effect from 1st November 1964. As regards parliamentary retiring allowances, I shall say something in detail a little later on. At presentI limit myself to the observation that steps to amend the benefits upwards are due, and in reality overdue. The increased pension benefits proposed will, as I shall indicate later, require increased contributions on the part of senators. In relation to increases in salaries and allowances, the Government is again convinced that the adjustments proposed are due, and even overdue. Circumstances are, of course, never really propitious for dealing with parliamentary salaries and allowances. Certainly some people are always found to say: " Now is not the time ". No doubt on this occasion, as in the past, that will be said. But to understand the Government's decision, it is only necessary to understand the facts pertaining to salary incomes. Recently the Leader of the Opposition in another place asked the Prime Minister if he would make available to the Parliament certain information and comparisons in the parliamentary pension and salary field and in certain related areas of salary, for instance, in the Public Service. Mr. Calwell added: " Most importantly, will his Government take suitable action to adjust parliamentary and electorate allowances in such appropriate fashion and at such time as it deems desirable in the light of movements in the directions that 1 have just instanced? "

As honorable senators know, material has been tabled in response to the request of the Leader of the Opposition. This material shows what may be called a cycle of increases in salary incomes since the 1959 adjustment of parliamentary salaries and allowances. The salaries and allowances of members of State Parliaments, which were increased following the Commonwealth adjustment of March 1959 have, with the exception of Victoria, been increased again by substantial amounts in 1963 or 1964. A very significant comparison may be made with the position of members of the Legislative Assembly in the State Parliament of New South Wales. Their salary is £2,650. Members of the National Parliament, a Parliament which has to deal with the greatest national and international problems and with a vast complex of social, economic and financial responsibilities, now receive £2,750. The State electoral allowances range from £650 to £1,050. Commonwealth allowances range from £850 to £1,050. Clearly, this state of affairs ought not to continue. Only this Parliament can change it.

Both this year and last year there have been large increases in Public Service salaries - in the professional grades and the administrative grades - and, I may add, as a result of arbitration. As I shall be indicating a little later on, there are now to be, on the decision of the Government, necessary adjustments in the salaries of the First Division of the Public Service, that is to say of the Permanent Heads of departments and also of statutory officers and related officers. The Government has necessarily had regard to these developments, and it believes that thoughtful and reasonable people will, on the evidence, be ready to accept that increases are now justified.

We have considered whether, even though the salary adjustments are more than due, we ought to defer them still longer. We have concluded that we should not. In the first place, we are firm in our view that the adjustments are warranted. In the second place, they are adjustments which come at the end of a cycle of adjustments and not at the beginning. As politicians, we are well aware of the fact that increases in the provision for Federal members are always attacked, and that a Senate election is in front of us. Nevertheless, we are convinced that honest dealing with the electors requires that they should know right away what our proposals are. We believe that they will appreciate the propriety of this course, and that on proper consideration they will see the fairness of the changes that are being made.

On some previous occasions, a review has been approached by first having an independent committee to inquire and report to the Government. We had the Nicholas com mittee in 1951. In 1955 and 1959 we had a committee of inquiry under the chairmanship df Sir Frank Richardson. This, however, has not been an invariable practice. On other occasions, the Government itself has brought proposals to Parliament without recourse to such a committee, and we have decided to do that on this occasion. We decided against a committee because what we are now proposing to the Senate is essentially an upgrading of the amounts applying under the existing arrangements for salaries, allowances and retiring allowances. It is not a review of the structure of the arrangements or of other parliamentary privileges.

Honorable senators will see that the salary of senators and members is to increase by £750 per annum to £3,500 per annum. As there are misapprehensions in some quarters, I would like to make it clear that senators' salaries, like ministerial salaries, are taxable at the normal rates. Thus, the increase of £750 is subject to income tax - say £280 in an average case - and to an increased retiring allowance contribution of £143. This means that the net current cash gain to the senator is £327 per annum.

The supplementary salaries of Ministers and other office bearers have been increased broadly in parallel with this basic increase. In the case of senior Ministers and the Leader of the Opposition, the increases range from £1,000 per annum to £1,250 per annum. In the case of junior Ministers, the increase is £750 per annum. In general, the increases are of the order of 30 per cent, of the 1959 level. They are a little more in some cases and a little less in others.

The electorate allowances have been increased, by no means extravagantly, by £250 per annum. Special allowances have been increased by amounts varying for different offices. The increases range from £100 per annum in the case of Whips, to £250/300 per annum in the case of Ministers and the Leader of the Opposition in the House, and £500 per annum in the case of the Prime Minister. Electorate allowances are, of course, granted to cover expenses incurred by members and their wives in discharging their public responsibilities. These costs have increased significantly since 1959. The same can be said of the costs of discharging the duties of various parliamentary offices. The expenses which private citizens do not normally encounter are ones which, in turn, the special allowances are designed to cover. It is proposed, although this will be done administratively, to increase travelling allowances for senior Ministers and the Leader of the Opposition by £3 per day and for junior Ministers and senators and members by £2 per day.

The actual adjustments to salaries and allowances must, inevitably, be in some degree a matter of judgment. Obviously, the adjustments must have regard to adjustments which have already been made in other incomes. Incidentally, average earnings in Australia have risen 35 per cent. since early 1959. They must have regard to trends in expenses incurred by members and office bearers. We have considered the facts on both these points and the proposals now before the Senate have been devised having regard to the facts. We believe the basis arrived at is justified by the facts and is one which will sustain the quality and prestige of the National Parliament.

I turn now to senators' and members' retiring allowances, the amounts of which are no longer appropriate to the increased parliamentary salaries. In considering the standard of benefits, we concluded that senators should be entitled to contribute for a basic pension which, in ordinary circumstances, would be 50 per cent. of their salary on retirement. The 1959 legislation resulted in 30 per cent. of the cost of pensions being met from senators' contributions to the fund. We have preserved this basis of financing in adopting the scale of contributions which the actuary has calculated for the benefits set out in this Bill. The contribution henceforth will be111/2 per cent. of salary, or, as I have said, £7 14s. per week on the proposed salary.

The scheme has now been in force since 1948 and, in the course of our review of the fund, the actuary reported that at 26th March 1963 there was a substantial surplus in the fund, then amounting to £77,000, which now would undoubtedly exceed £100,000. This surplus, which has been built up entirely from the contributions of members, has enabled us to review the rates of pension now being paid. There are many who are now receiving pensions at the rates prevailing prior to the 1959 legisla tion. We have decided to raise these pensions to the rates that were adopted in 1959 and, as a result of the surplus in the fund, 30 per cent. of the cost of these pensions will be met from the fund. Those who retired since the 1959 legislation will receive either a lump sum payment from the surplus or an increased pension related to 50 per cent. of the parliamentary salaries hitherto in force. These pensions will also be financed on the basis of 30 per cent. from the fund.

Finally, we have examined the possibility of a contributory scheme to give very much modified effect to the recommendations of the Richardson Committee for a supplementary scheme for Ministers and certain other office bearers. The scheme now to be introduced, based upon actuarial advice, provides for a basic contribution rate of £4 5s. per week and pensions varying with service from a minimum of eight years to a maximum of 14 years. The contribution rates have also been calculated on a basis to ensure that 30 per cent. of the pensions will be met from the fund. I commend the Bill to the Senate.

Debate (on motion by Senator McKenna) adjourned.

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