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Remuneration and Allowances Legislation Amendment Bill 1992

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House: House of Representatives Portfolio: Industrial Relations

Purpose To set the remuneration payable to members of the Industrial Relations Commission (IRC); remove the setting of such salaries from the jurisdiction of the Remuneration Tribunal; and to set the salary payable to the Vice- Chancellors and Deputy Vice- Chancellors of the Australian National University and the University of Canberra.

Background The amendments in the Bill relating to the remuneration of members of the IRC have their origins in a report on the structure of the IRC and the remuneration of its members conducted Mr Gerry Gleeson (the Gleeson Report). Changes to the structure of the IRC and the link between the pay of members of the IRC and judges of the Federal Court were mooted in May 1990 when the government accepted an ACTU submission on the matter. The changes were opposed by members of the IRC, and the committee headed by Mr Gleeson was established to review the matter. The government announced that it had accepted the Gleeson Reports recommendations on the structure of the IRC and the remuneration of its members in 1991. The major elements in the structural changes were the introduction of new positions of Vice President and Senior Deputy Presidents, and these changes were implemented by the Industrial Relations Legislation Amendment Act (No. 2) 1991.

Regarding remuneration, the governments submission to the committee headed by Mr Gleeson was that the rates for existing levels, excluding the President, remain unchanged. Another submission argued that Deputy Presidents should be compared with the Heads of State Tribunals as some of those people are also Deputy Presidents of the IRC. 1 The Gleeson Report rejected both these arguments and recommended that the remuneration of Senior Deputy Presidents be linked to that of judges of the Federal Court, with an annual salary of $139 638, while Deputy Presidents receive 95% of this amount, or $132 656. The remuneration payable to Commissioners is 70% of that payable to Deputy Presidents, so that the decision in relation to Deputy Presidents effects most members of the IRC. The Gleeson Reports recommendations were accepted by the government and the issue was referred to the Remuneration Tribunal, which has responsibility for determining the remuneration payable to members of the IRC.

The matters were considered by the Remuneration Tribunal in its Determination Number 1 of 1992, dated 30 January 1992. The Remuneration Tribunal had two matters to consider, the remuneration payable to the Deputy Presidents and that payable to the new positions of Vice- President and Senior Deputy Presidents. The Remuneration Tribunal considered the recommendation of the Gleeson Report and the relationship between the remuneration of Deputy Presidents and Federal Court judges, and whether Deputy Presidents should receive the same remuneration, or 95% of that received by Federal Court judges. The Remuneration Tribunal rejected the 'discount' approach on the basis that no case had been made to show that this should be the case; such a course of action would be perceived as an injustice to the Deputy Presidents; it would be inconsistent with the independence of the IRC; and it would be seen as a formal downgrading of the standing of the IRC. 2 The Remuneration Tribunal also noted that in recent history the remuneration of senior members of the IRC and Federal Court judges had been the same and that there had been no change in duties to alter this link. As a result, the Remuneration Tribunal recommended that Deputy Presidents receive an annual salary of $139 638.

Regarding the remuneration for the new offices of Vice- President and Senior Deputy President, the Gleeson Report recommended that the salary for the Vice- President be between those recommended for the President and the Senior Deputy President. The recommendation was for a salary 3% above that for Senior Deputy President. As noted above, the recommendation in respect of Senior Deputy Presidents was for parity with Federal Court judges.

The Remuneration Tribunal approached the problem by trying to determine the functions of the new positions in relation to the existing positions. The Remuneration Tribunal, after considering oral submissions from members of the IRC and questioning these members, concluded that there would be no difference between the functions performed by the Vice- President and Deputy Presidents. Similarly, after considering submissions from the government and members of the IRC, the Remuneration Tribunal could not distinguish the roles to be performed by Senior Deputy Presidents and Deputy Presidents. The Remuneration Tribunal concluded that as it could not accurately determine the duties to be performed by these positions, it could not determine an appropriate salary. The result was that no determination was made regarding these positions. This has led to obvious difficulties in advertising and filling the positions. The findings of the Remuneration Tribunal were rejected by the government, which announced that it would legislate to give force to the recommendations contained in the Gleeson Report. This Bill will achieve that aim.

The determinations made regarding the salary payable to members of the IRC were to have effect from 1 January 1991. However, such determinations do not come into force until 15 days after being tabled in parliament, with sub- section 7(5E) of the Remuneration Tribunal Act 1973 providing that after they have come into effect they are to operate from the date of the determination. This determination has yet to be tabled.

In addition to these problems, the matters addressed by this Bill have also been the subject of political controversy. It has been suggested by commentators that the submission made by the ACTU in May 1990, which was based on the IRC following the wage increase principles it had determined, was motivated by the IRCs decision in the April 1990 National Wage Case to reject the ACTU/government position, known as Accord Mk. VI. The governments decision to reject the findings of the Remuneration Tribunal has been seen by some to be an example of the ACTU and governments willingness to exert pressure on the IRC to act as a rubber stamp in approving the agreed ACTU/government submission in cases before it.

Since the announcement to overrule the decision of the Remuneration Tribunal was announced, two members of the IRC have resigned. Justice Peterson resigned from the IRC to accept a position in N.S.W. which involves work in that States Industrial Commission and Industrial Court. The new position has a salary of approximately $153 000. Justice Peterson did not give reasons for the change. However, the second member to announce their retirement from the IRC recently, Commissioner Turbet, did give reasons for the resignation. Mr Turbets letter of resignation, dated 14 April 1992 and published in a number of newspapers on 25 April, gives three main reasons for his resignation. First, that the government cannot be relied on to keep its word (this elates to previous statements regarding the overruling of decisions of the Remuneration Tribunal); secondly, that actions by the government had damaged the public's perception of the independence and the integrity of the IRC; and thirdly the governments lack of understanding of paragraph 51(xxxv) of the Constitution (this provides for conciliation and arbitration for the settlement of industrial disputes extending beyond one State) on the grounds that the Accord has placed this power in the hands of the Prime Minister and the Secretary of the ACTU. These arguments were rejected by the Minister in a letter to Mr Turbet dated 24 April 1992. The Australian Financial Review reported the Australian Democrats Industrial Relations spokesman, Senator Bell, as saying that the comments in Mr Turbets letter were 'less than accurate', and went on to say 'According to other sources, Commissioner Turbet is understood to have first foreshadowed his resignation around this time about two years ago - once he had maximised his possible retirement income.' 3

Another contentious point at the moment is the appointment of nominees of the ACTU to the IRC. This issue was mentioned by Mr Turbet as a threat to the independence of the IRC and the Opposition spokesman on Industrial Relations commented that 'The Liberal and National Parties will not guarantee the security of tenure of future appointments by the Keating Government to the IRC. The Commission is already intolerably stacked with ACTU nominees.' 4 Some commentators have suggested that while the government has decided to legislate on the matter of salaries payable to members of the IRC, its independence is based on the security of tenure of its members, who cannot be dismissed for reaching decisions disliked by the government.

The other matter dealt with in this Bill, the salary payable to certain positions in Commonwealth controlled universities, also involves the rejection of a determination of the Remuneration Tribunal. In its Determination Number 30 of 1991, the Remuneration Tribunal recommended salary increases of up to 30% for the Vice- Chancellors and Deputy Vice- Chancellors of the Australian National University and the University of Canberra. The decision to overrule the increases was announced by the Minister on 15 March 1992 and was based on the degree of the increase and that the decision anticipated the introduction of performance pay for senior members of the public service.

Main Provisions Amendments to the Industrial Relations Act 1988 Sub- section 12(2) of this Act currently provides for the remuneration of part- time members of the IRC to be determined by the Remuneration Tribunal. Clause 4 will repeal this provision and provide that such remuneration is to be the same proportion of the remuneration of full time members as their hours are of full time hours.

Section 21 of the Act provides for the salary and travel allowance of the President and Deputy Presidents to be determined by the Remuneration Tribunal. Clause 5 will substitute new provisions dealing with these matters. Allowances will be as prescribed and the rate of salary will be:

* President: equal to that payable to the Chief Justice of the Federal Court;

* Vice President: 103% of that payable to a judge of the Federal Court;

* Senior Deputy President: equal to that paid to a judge of the Federal Court; and

* Deputy President: 95% of that payable to a judge of the Federal Court.

Commissioners are to receive a salary equal to 70% of that payable to a Deputy President and receive such allowances as prescribed (clause 6 which will substitute a new sub- section 23(1) into this Act).

Clauses 8 to 12 contain transitional provisions. Clause 8 deals with the salary payable to Presidential members for the period 1 January 1991 until the commencement of this Bill, and applies where the notional salary payable during this period was greater than the actual salary paid. The notional salary will be the sum of the amounts payable had the rates of salary established by this Bill applied and any amounts that would have been payable under determinations of the Remuneration Tribunal had section 21 of this Act not been amended. Clause 9 provides that allowances payable to Members of the IRC payable under determinations taking effect after the commencement of this Bill will remain payable until regulations regarding allowances are made under this Bill. Clause 11 provides for agreement regarding the proportion of full- time hours to be worked by part- time members to continue in force for the purposes of proposed sub- section 12(2). Clause 12 will appropriate the funds necessary to meet the requirements imposed by the transitional provisions. In the explanatory memorandum to the Bill, it is estimated that there will be no significant impact on Commonwealth expenditure.

Amendments to the Remuneration Tribunal Act 1973 Clause 21 will amend this Act to provide that determinations made before the commencement of this Bill that directly determined the salary payable to Presidential members of the IRC is invalid if it would take effect after the commencement of this Bill.

Clause 22 will deem the Remuneration Tribunal to have determined that the remuneration payable to the Vice- Chancellors and Deputy Vice- Chancellors of the Australian National University and the University of Canberra will be that set out in the Table in clause 22.

References 1. Remuneration Tribunal, Determination No. 1 of 1992, p. 5. 2. Ibid., p. 10. 3. Australian Financial Review, 27 April 1992, p. 7. 4. Media Relaese, 26 April 1992.

Bills Digest Service 28 April 1992 Parliamentary Research Service For further information, if required, contact the Economics and Commerce Group on 06 2772460.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Commonwealth of Australia 1992

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Published by the Department of the Parliamentary Library, 1992.