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Government to reform MPs' entitlements



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THE HON GARY GRAY AO MP SPECIAL MINISTER OF STATE AND MINISTER FOR THE PUBLIC SERVICE AND INTEGRITY

MEDIA RELEASE

December 15, 2011

Government to reform MPs’ entitlements

Key tax-free entitlements enjoyed by MPs will be reformed, the Special Minister of State Gary Gray said today.

Mr Gray said long-standing expensive travel entitlements will be scrapped or slashed, including the Life Gold Pass, overseas study travel, and post-service travel.

“The entitlements system has suffered systemic neglect for decades and fostered a culture of hidden perks and political fixes,” Mr Gray said.

Mr Gray made the announcement after the Remuneration Tribunal indicated today that the base annual salary for Federal Parliamentarians will increase from $140,910 to $185,000 next year. The tribunal made its decision after completing a comprehensive work-value study.

Earlier this year, both sides of Parliament supported legislation to restore the tribunal’s power to determine MPs’ pay and to remove any political interference in the process.

The pay rise for the first time includes an allowance for shadow ministers.

The increase will become effective only after Parliament passes further legislation to prevent windfall gains by current and former MPs belonging to Parliament’s original defined benefit pension scheme established in 1948.

The legislation will be introduced after Parliament resumes on February 7 and will include amendments to abolish the Life Gold Pass. The Remuneration Tribunal will then issue its final determinations. The details of proposed changes:

• Life Gold Pass: Cost taxpayers $1.3 million last financial year. Under this benefit, former MPs qualify for life for up to 25 business-class return trips each year anywhere in Australia. This includes travel with their spouse.

o This benefit will be abolished prospectively so that it is not available to those who enter Parliament at or after the next federal election. Travel by existing Gold Pass holders or MPs who have qualified for the pass will be reduced from 25 trips to 10 annually. Spouse travel for qualified pass holders will also be reduced from 25 to 10 return trips. These changes will occur when the legislation is enacted.

 

• Severance Travel: Cost taxpayers $291,908 last financial year. Under this benefit, former MPs who don’t qualify for the Life Gold Pass qualify for between six months and five years’ severance travel after they leave Parliament. They get up to 25 business-class return trips each year within Australia.

o Travel by current parliamentarians, when they retire, will be reduced from 25 business-class return trips anywhere in Australia each year to five return trips to Canberra in the six months after they leave Parliament. This change will occur when the tribunal makes its determination early next year.

• Overseas Study Travel: Cost taxpayers $915,849 last financial year, but has a potential total cost of $4 million a year. Under the existing scheme, serving MPs are entitled to travel to the value of one first-class round-the-world ticket per three-year Parliamentary term. The benefit accrues into the following Parliament if it is not used. This benefit was worth $21,700 as at 1 July 2011. This benefit will be scrapped immediately for all parliamentarians although current accruals will be honoured.

Mr Gray said the current system of parliamentary remuneration and entitlements was a hotch potch of at least 11 Acts of Parliament, three sets of regulations, six Remuneration Tribunal reports and numerous ministerial determinations.

Indeed, the Tribunal had noted today that it had not conducted a full review of the work of a parliamentarian with a view to establishing an appropriate base salary since 1988.

In September 2009, the Australian National Audit Office criticised the administration of parliamentary entitlements. In response, the Gillard Government appointed the Committee for Parliamentary Entitlements (Belcher Report) which produced 39 recommendations in a report tabled in March this year.

“Parliament endorsed one of the key recommendations by restoring the independence of the Remuneration Tribunal to determine base salaries of Parliamentarians and made the determinations non-disallowable,” Mr Gray said. “Other recommendations were referred to the tribunal for advice.

“Both the Belcher committee and the Remuneration Tribunal have recommended decisive action to abolish or curtail some of the controversial entitlements which have emerged such as Life Gold pass, severance travel and overseas study travel.

“Entitlements such as severance travel and overseas study travel represent a low point in a shadowy system of parliamentary remuneration which has developed over many decades, characterised by hidden perks, political fixes and unjustified tax-free spending.

“This reform will bring parliamentarians a transparent, value-based wage increase which will be balanced by the removal of millions of dollars of travel benefits which have for years rightly attracted strong public criticism.”

Mr Gray said the Tribunal had today made the following key recommendations regarding MPs: 

• on the basis of a careful and thorough assessment of the work of parliamentarians, the Tribunal considers that parliamentary base salary should be set at $185,000;

• the introduction of additional salaries for shadow ministers;

• closure of the Life Gold Pass scheme;

• termination of the present Overseas Study Travel entitlement;

 

• greatly limited severance travel entitlement;

• severance of the link between pensions under the 1948 scheme and current parliamentarians’ salaries; and

• the introduction, consistent with the recommendations made by the Tribunal in 1986, of workers compensation arrangements for parliamentarians.

Mr Gray said he was pleased to note the broad-based support across the Parliament for these measures.

Members of the public are able to find, on the tribunal’s website, the base salary of a general backbencher and the additional salaries for each individual parliamentary office and minister. Full details about the Remuneration Tribunal’s decision are published on its website www.remtribunal.gov.au  

Media contact: John Arthur 0408 991 261