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Members of Parliament (Life Gold Pass) and Other Legislation Amendment Bill 2012

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2010-2011-2012

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

MEMBERS OF PARLIAMENT (LIFE GOLD PASS) AND OTHER LEGISLATION AMENDMENT BILL 2012

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Special Minister of State,

the Hon Gary Gray)



MEMBERS OF PARLIAMENT (LIFE GOLD PASS) AND OTHER LEGISLATION AMENDMENT BILL 2012

 

OUTLINE

 

This Bill amends the Members of Parliament (Life Gold Pass) Act 2002 (LGP Act) to close the Life Gold Pass (LGP) scheme to persons who enter or re-enter the Parliament at or after the commencement of the Bill, and to reduce the entitlement of:

·          existing LGP holders, who have never held office as Prime Minister, and their spouse or de facto partner; and

  • the spouse or de facto partner of a sitting member who has qualified for a LGP,

from 25 to 10 domestic return trips per financial year (with a transitional provision for the balance of the 2011-12 financial year), as recommended by the Remuneration Tribunal in its initial report, Review of the Remuneration of Members of Parliament , dated 15 December 2011.

 

Schedule 2 of the Bill amends the Remuneration Tribunal Act 1973 and the Parliamentary Contributory Superannuation Act 1948 (1948 Act) to give the Remuneration Tribunal the power to determine portions of additional Parliamentary office holder salary and additional salary in relation to a Minister of State that may be excluded from the calculation of superannuation benefits payable to current and former Ministers of State and parliamentary office holders who are members of the scheme under the 1948 Act (1948 Act scheme). 

 

By determining such portions the Tribunal can prevent windfall gains flowing from any increase in salary for parliamentary office holders or Ministers of State to superannuation benefits under the 1948 scheme.

 

These powers build upon a similar power conferred on the Remuneration Tribunal by the Remuneration and Other Legislation Amendment Act 2011 , which granted the Tribunal the power to determine a portion of parliamentary base salary that would not flow to members of the 1948 scheme from any future increase in parliamentary base salary that the Tribunal might determine.

 

Schedule 2 of the Bill implements a recommendation of the Remuneration Tribunal’s initial report, of its Review of the Remuneration of Parliamentarians released on 15 December 2011.

 

Financial Impact Statement 

Limited savings from amendments to the LGP Act (expenditure on Life Gold Pass travel in 2010-11 was $1.3m).  No direct budget impact from amendments to the RT Act and 1948 Act.

 

Statement of Compatibility with Human Rights

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 , as it does not engage any of the applicable rights or freedoms.

MEMBERS OF PARLIAMENT (LIFE GOLD PASS) AND OTHER LEGISLATION AMENDMENT BILL 2012

 

 

NOTES ON CLAUSES

Clause 1 - Short title

1.                   This clause sets out how the Bill is to be cited, that is, the Members of Parliament (Life Gold Pass) and Other Legislation Amendment Act 2012 .

Clause 2 - Commencement

2.                   This clause provides that Schedule 1, item 1, and Schedule 1, items 6 to 8, will commence on 1 July 2012, and all other provisions will commence on the day that the Bill receives the Royal Assent.

Clause 3 - Schedule(s)

3.                   This clause provides that each Act that is specified in a Schedule is amended or repealed as set out in that Schedule.



Schedule 1 - Life Gold Pass

 

Summary

 

The Members of Parliament (Life Gold Pass) Act 2002 (the Principal Act) provides for a Life Gold Pass (LGP) entitlement for former Senators and Members (members), who have served the necessary qualifying period in the Parliament, as determined by the Remuneration Tribunal.

 

Schedule 1 amends the Principal Act to close the LGP scheme to persons who enter or re-enter the Parliament after the commencement of the Bill, and reduces the entitlement for:

  • existing LGP holders, who have never held office as Prime Minister, and their spouse or de facto partner (from 25 to 10 domestic return trips per financial year); and

·          the spouse or de facto partner of a sitting member, who has never held office as Prime Minister, and has qualified for a LGP (from 25 to 10 return trips to Canberra per financial year).

Item 1 - Section 3

This item amends the Simplified Outline in section 3 of the Principal Act, to reflect the reduction in the LGP entitlement for LGP holders, who have never held office as Prime Minister, from 25 to 10 domestic return trips per year.

 

Item 2 - At the end of section 3

This item inserts a note at the end of the Simplified Outline in section 3 of the Principal Act, to reflect that the LGP scheme has been closed to new members from the commencement of the Bill, as provided for under new section 4A of the Principal Act (see item 5 below).

 

Item 3 - Section 4 (at the end of the definition of holder of a Life Gold Pass)

This item amends the definition of holder of a Life Gold Pass in section 4 of the Principal Act, to provide that a person cannot be the holder of a LGP if they are excluded from the scheme by new section 4A of the Principal Act (see item 5 below).

 

Item 4 - Section 4

This item inserts a definition for parliamentary allowance into section 4 of the Principal Act.  Parliamentary allowance is defined to have the same meaning as in the Parliamentary Superannuation Act 2004 .

 

Item 5 - After section 4

This item inserts new section 4A into the Principal Act to close the LGP scheme to non-LGP holders who enter or re-enter the Parliament (and thereby become entitled to a parliamentary allowance) after the commencement of the Bill.  Existing LGP holders are not affected by this item.  Under new section 4A, non-LGP holders cannot become the holder of a LGP where:

·        the person entered the Parliament for the first time (and therefore became entitled to a parliamentary allowance for the first time) after the commencement of the Bill (new subsection 4A(1));

·        the person was previously a member, but not a member immediately before the commencement of the Bill (and therefore was previously entitled to a parliamentary allowance, but not entitled to a parliamentary allowance immediately prior to the commencement of the Bill) (new subsection 4A(2)); and

·        the person was a member (and therefore entitled to a parliamentary allowance) immediately before the commencement of the Bill, but at or after that commencement, ceased to be a member (and ceased to be entitled to a parliamentary allowance) without qualifying to become the holder of a LGP (new subsection 4A(3)).

 

Sitting members (those entitled to a parliamentary allowance immediately prior to the commencement of the Bill) who are not LGP holders will continue to be able to become the holder of a LGP, provided they serve the remainder of the relevant qualifying period without leaving the Parliament (and therefore have a continuous entitlement to a parliamentary allowance).  

 

New subsections 4A(4), (5) and (6) apply to sitting members who ‘retire’ from one House of Parliament and are elected to the other House within 3 months of their ‘retirement’. The subsections provide that such a person is taken to have been entitled to a parliamentary allowance until so elected (therefore the member remains eligible for and continues to accrue an entitlement to a LGP).

 

Item 6 - Subsection 11(2) (table items 1 and 2)

This item amends table items 1 and 2 of subsection 11(2) of the Principal Act, to reduce the number of domestic return trips available to a former member, who has never held office as Prime Minister, and is the holder of a LGP, and their spouse or de facto partner, from 25 to 10 per year.

 

Item 7 - Subsection 12(2) (table item 3)

This item amends table item 3 of subsection 12(2) of the Principal Act, to reduce the number of return trips to Canberra available to the spouse or de facto partner of a sitting member who has qualified for a LGP, and has never held office as Prime Minister, from 25 to 10 per year.

 

Item 8 - Application of items 6 and 7

This item provides that, for the avoidance of doubt, the reduction in entitlements provided in items 6 and 7 apply to:

·    every LGP holder, who has never held office as Prime Minister, and their spouse or de facto partner; and

·    the spouse or de facto partner of all sitting members, who have never held office as Prime Minister, and have satisfied the relevant qualifying period for the issue of a Life Gold Pass,

whether the person became the holder of a LGP, or satisfied the relevant qualifying period for the issue of a Life Gold Pass, before, on or after the commencement of those items.

 

Item 9 - Entitlements for the transition period

This item provides a transitional arrangement for the balance of the 2011-12 financial year.  For entitled persons covered by items 6 and 7 who have more than 2 unused trips remaining, it reduces to 2 the number of domestic return trips available from the transition day (defined as the later of the commencement of this item, or 1 April 2012) until 30 June 2012.

 

Item 10 - Compensation-constitutional safety net

This item provides a constitutional safety net equivalent to section 32 of the Principal Act, to provide a reasonable amount of compensation in circumstances where any provisions in the Bill are found to result in an acquisition of property under paragraph 51(xxxi) of the Constitution.



Schedule 2 - Salary and allowance by way of salary

 

Parliamentary Contributory Superannuation Act 1948

 

Item 1 - Subsection 4(1) (definition of allowance by way of salary )

This item amends the definition of ‘allowance by way of salary’.  The definition sets out what is not an allowance by way of salary for the purposes of the Act.

 

Paragraph (a) of the definition is concerned with particular allowances and provides that the following allowances do not form part of an allowance by way of salary for the purposes of the Act:

(a)       special allowance of office;

(b)      electorate allowance;

(c)       travelling allowance; or

(d)      any allowance, or any allowance in a class of allowances, prescribed for the purposes of the definition.

The reference to ‘any person’ in paragraph (a) means that these exclusions are not limited to office holders.

 

The definition now specifies in new paragraph (b) that, in relation to an office holder, any portion determined by the Remuneration Tribunal under 7(1B) of the Remuneration Tribunal Act 1973 does not form part of an allowance by way of salary for the purpose of the Act.

 

The effect of this is that the Remuneration Tribunal may determine that a lower allowance by way of salary will apply under the Act for office holders.  This includes in relation to the calculation of additional contributions and benefits under the Act for current office holders, as well as the additional benefits for retired members who previously held these offices.

 

This is in line with item 5 of this Schedule (which inserts subsection 7(1B) in to the Remuneration Tribunal Act 1973 ) to allow the Remuneration Tribunal to limit the windfall gains to the superannuation benefits for current and former parliamentarians covered by the Act, from increases in the salary paid to parliamentary office holders.

 

Item 2 - Subsection 4(1) (definition of salary )

This item amends the definition of ‘salary’.  The definition sets out what is not salary, in relation to a Minister of State, for the purposes of the Act.

 

Paragraph (a) of the definition provides that any allowance is not salary, in relation to a Minister of State, for the purposes of the Act. 

 

New paragraph (b) provides that any portion determined by the Remuneration Tribunal under 7(2A) of the Remuneration Tribunal Act 1973 does not form part of the superannuation salary, in relation to a Minister of State, for the purpose of the Act.

 

The effect of this is that the Remuneration Tribunal may determine that a lower superannuation salary will apply under the Act for Ministers of State.  This includes in relation to the calculation of additional contributions and benefits under the Act for current Ministers of State, as well as the additional benefits for retired members who previously held these positions.

 

This is in line with item 6 of this Schedule (which inserts subsection 7(2A) in to the Remuneration Tribunal Act 1973 ) to allow the Remuneration Tribunal to limit the windfall gains to the superannuation benefits for current and former parliamentarians covered by the Act, from increases in the salary paid to Ministers of State.

 

Item 3 - Section 22T

This item clarifies the operation of section 22T in relation to particular circumstances.

 

New subclause 22T(5) makes it clear that a determination of the Remuneration Tribunal under section 7(1) of the Remuneration Tribunal Act 1973 , and a related determination of the Tribunal under subsection 7(1A) or 7(1B) of that Act, that take effect at the same time, are to be taken as a single alteration of the allowance for the purposes of paragraphs 22T(1)(i) and (iii), respectively. 

 

For example, where the Remuneration Tribunal determines the parliamentary base salary and, with effect from the same time, determines a portion of that parliamentary base salary that will not be counted as parliamentary allowance under the 1948 Act, the net effect of the two determinations will be relevant in whether there has been a decrease in the underlying payment.  That is, it is intended that the determination of the portion will not, in itself, constitute a decrease for the purposes of the section.

 

The situation is similar for where the Remuneration Tribunal determines the additional Parliamentary office holder salary and determines a portion of that salary that will not be counted as allowance by way of salary under the 1948 Act.

 

New subclause 22T(6) makes it clear that an alteration of the salary in respect of a Minister of State, and a related determination of the Remuneration Tribunal under subsection 7(2A) of the Remuneration Tribunal Act 1973 , are to be taken as a single alternation of the salary for the purposes of paragraph 22T(1)(ii).

 

For example, where there is an alteration in the salary in respect of a Minister of State and the Remuneration Tribunal makes a determination of a portion of that salary alteration that will not be counted as salary under the 1948 Act, the net effect of the salary alteration and the related determination will be relevant in whether there has been a decrease in the underlying payment.  That is, it is intended that the determination of the portion will not, in itself, constitute a decrease for the purposes of the section.



Remuneration Tribunal Act 1973

 

Item 4 - Subsection 3(1)

This item defines ‘additional Parliamentary office holder salary’ as additional amounts which are paid to members of parliament in recognition of their holding particular offices or performing particular functions in the Parliament and identified as such by the Remuneration Tribunal in a determination.

 

Item 5 - After subsection 7(1A)

New subsection 7(1B) would grant the Tribunal the power to determine that a portion of ‘additional parliamentary office holder salary’ is not ‘allowance by way of salary’ when calculating the superannuation benefits of a member under the Parliamentary Contributory Superannuation Act 1948 .

 

New subsection 7(1C) would allow the Tribunal to deal with the situation where the superannuation benefits payable to a former member of the Parliament who held various parliamentary offices are calculated taking account of the different amounts of additional salary payable in respect of different parliamentary offices.

 

Subsection 7(1C) would allow the Tribunal, in determinations under subsection 7(1B), to specify that different portions of additional Parliamentary office holder salary, depending on the office held, are not to flow through to the benefits payable to the former parliamentary office holders under the 1948 Act.  The amount to be disregarded can be up to 100 per cent of the additional salary payable and the determination can specify the particular circumstances in which the different portions are to apply.

 

Item 6 - After subsection 7(2)

This item grants the Tribunal the power to determine that a portion of the additional salary payable to Ministers of State is not ‘salary’ for the purposes of the calculation of superannuation benefits under the Parliamentary Contributory Superannuation Act 1948 .

 

Item 7 - After subsection 7(5F)

This item would allow the Tribunal, when it makes a determination under new subsection 7(2A), to specify that the determination is to commence on a day on which a specific event occurs or occurred.  This would allow the Tribunal, for example, to determine that a portion of the additional salary payable to a Minister will not be counted for the purposes of the Parliamentary Contributory Superannuation Act 1948 , from the date that the additional salary becomes payable.

 

Item 8 - Paragraph 7(8AA)(a)

This item provides that a determination made by the Tribunal under subsections 7(1B) or 7(2A) is not subject to the disallowance mechanism in subsection 7(8) of the Remuneration Tribunal Act 1973 , to ensure the independence of the Tribunal in determining salaries and allowances.  This provision is consistent with the provisions inserted into the Remuneration Tribunal Act 1973 by the Remuneration and Other Legislation Amendment Act 2011 .

 

Item 9 - Paragraph 7A(a)

This item requires that the Tribunal publish reasons for any determination it makes under new subsections 7(1B) or 7(2A), as is the case at present with similar determinations of this nature.