GARY GRAY: The Remuneration Tribunal today released three reports, its decisions in relation to parliamentarian and public service pay. The tribunal intends to issue determinations, that is to say enforceable decisions, on these issues in 2012. It's released three reports. And I will respond to them and then take your questions.
The review of pay for secretaries or heads of departments was initiated as a consequence of work commenced as long ago as 2006, spans numerous governments and decisions by three prime ministers. It's a decision by the tribunal to establish pay levels for nineteen public servants, departmental secretaries. In addition to that, it makes a decision on remuneration for specified statutory officers, of which there are five officer-holders such as the Commissioner of Taxation, such as customs and border protection.
And in those areas, again, decisions are made on a principled basis in order to establish a remuneration level which is entirely salary-based. Those decisions have been released publicly and are therefore the subject both of discussion, but also will become operable in 2012, following the legislative changes that will be introduced into the parliament I hope in February of 2012.
The changes to public service pay will be phased over a two-year period. They are not pay increases that apply from 1 January, 2012, in total. They will be phased in through the course of 2012, '13, with a final payment in 2014.
On politicians, since 2004, federal parliamentarians have seen their conditions of employment change in a range of ways. And it became apparent, following the work of Belcher and Williams, in the course of 2008 and 2009, and with the publication of the Belcher report and requirements within Belcher, that firstly an independent capacity for the Remuneration Tribunal to determine MPs' wages was appropriate.
It was also necessary to be compliant with the Belcher report to look at the non-transparent payment benefits that parliamentarians receive. One of the outstanding features of this decision is that it removes, that it closes, that it ends these non-transparent payment systems. That's a good thing.
In addition to that, the new structure also takes into account a substantial work value study, a work value study that's been carried out throughout 2011 and which is again published as a consequence of today's decisions. That work value study places the value of a backbench member of parliament's work at between one-hundred-and-eighty-five and two-hundred-and-fifty-thousand-dollars per year. That work value study has resulted in a decision by the Remuneration Tribunal to establish a backbencher salary at one-hundred-and-eighty-five. There are consequential flow-ons through ministerial salary, through cabinet ministerial salary and also to prime ministerial salary.
But there's also another fundamental decision and that is the decision to pay shadow ministers a salary of office. That allowance of office, that salary of office, is in the range of twenty to twenty-seven-and-a-half per cent, depending on the office holder: twenty per cent for a member of the shadow ministry; twenty-five per cent for a member of the shadow cabinet; and at twenty-seven-point-five for the leader of opposition business in the house.
The decisions by the tribunal represent a step towards transparency. It represents independence of the tribunal. And importantly, it represents the removal of opaque, of non-transparent perks in the system that provide tax-free salary equivalent benefits for parliamentarians and it replaces it with a more transparent and reasonable system.
I'm really happy to take your questions.
QUESTION: Minister, we're about to face difficult economic times. Is this the most appropriate time for politicians to be getting a pay rise?
GARY GRAY: It's never an appropriate time for politicians to be contemplating a pay rise. The importance of this process is it's taken out of the hands of politicians, both the pay level and the timing. It's provided the tribunal with the capacity to independently determine those matters and that's the world in which we live.
QUESTION: But there's no economic context in the pay rise, is there? There's no mention of economic times, how hard it might be to - for other people and so on.
GARY GRAY: The context is purely a body of work that needed to be concluded, given decisions of the parliament as far back as 2004 on the broad salary structure and entitlement of members of parliament, but then also, as is made clear by the tribunal, it's nearly a quarter of a century since the last review of MPs work and their work value, and so on the basis of that the Tribunal made its independent decision.
It isn’t for me, as a Minister or as a Member of Parliament to question either the timing or the content of the Tribunal’s decision. The key thing for me is transparency, independence, and the capacity to make determination and not to give to politicians the ability to make these decisions.
You see classically what a politician will do is not take a pay rise, but pay themselves a non-transparent, non-reportable salary-like benefit, and that’s characterised our politicians’ payment system for the last fifty years.
QUESTION: Minister, is it your hope that as part of these changes you might be able to retract a better quality, better qualified people to politics eventually down the track?
GARY GRAY: I think that’s largely Matthew in the hands of electors. They will make the call on who they elect. But I think what it does do is it allows people to see a level of salary which gives them certainty as to what they would be paid.
Under the current system, as many of you know, if you go to the various websites to try to identify what parliamentarians get paid, it’s expressed in percentages of percentages of percentages.
The system is naturally opaque. What this does is make it necessarily transparent. For the first time you’ll be able to go to a website and see exactly what you get paid. That I think is an attractive feature of the new system.
QUESTION: Minister, is it true that we will now see some public servants getting salaries around seven-hundred-thousand dollars or more?
GARY GRAY: On some occasions it will be more. Those salary levels for our departmental secretaries - and we’ve got to have in mind that there are one-hundred-and-sixty-five-thousand federal public servants. There are nineteen departmental secretaries in this category for which this Remuneration Tribunal decision applies.
The decision that has been made has been to provide categories of departmental secretary and then within those categories three separate pay points, and the point in those pay points at which individual departmental secretaries will be located is ultimately a decision for the Secretary of Prime Minister and Cabinet, and also for the Public Service Commissioner.
QUESTION: Well does this give new meaning to the word Fat Cat?
GARY GRAY: I don’t think it does, because what it does for our senior public servants is reward them for their capacity, capability, and responsibility.
It’s important that we have in mind that the nineteen public servants who run the public departments that run our country provide both a service and also provide a capability that manages our system.
If you provide a comparison to the private sector I don’t think you can see any comparison with the level of private sector remuneration to how our departmental secretaries are rewarded, but you can see that our departmental secretaries have responsibilities and accountabilities that on many occasions are way in excess of those that we see in the private sector.
So this is an appropriate measure, independently taken by the Remuneration Tribunal so that it doesn’t require a political interference.
In the past we have seen politicians, Prime Ministers, Ministers, able to influence payments made to senior public servants. This removes that.
QUESTION: Minister, can you explain the flow-on effect to the States and Territories? Will there be pay rises for Premiers and State Ministers and so on in time to come?
GARY GRAY: It’s a good question. Many of our State Parliaments do have salary systems that are organically linked to federal backbencher salaries. When we introduced into the Parliament in March the bill, the remuneration and other legislation amendment bill we wrote to all State Premiers and party leaders - minor party leaders included - in all States and Territories to advise them of this decision that was pending by the Federal Tribunal and also to make them aware that they should not seek to link their salaries to these decisions.
There were several reasons for that. The first one being this is a balanced decision on the basis of the workload of a Federal Member of Parliament. Secondly, there are a range of benefits that disappear as a consequence of this - the gold pass disappears; study tour travel disappears; severance travel disappears - so we have closed a number of payment systems and the Tribunal has made a decision based specifically on a Federal Parliamentarian’s workload.
So we expect that our State jurisdictions will take account of that and not simply flow it through.
QUESTION: Minister, does this have any implications…
QUESTION: What’s been the response to - what’s been their response to your consultation on that? Have they said it will flow through?
GARY GRAY: In general, positive and understanding, but all Premiers and State Government leaders are aware of this decision.
It does of course have budget implications. The budget implications are at two levels. Firstly, the removal of the non-transparent entitlements. It’s difficult to put a real cost on that because some of them - like the gold pass - are an entitlement that exists amongst three-hundred former parliamentarians; former Cabinet Ministers; former Ministers - and those entitlements are largely demand driven.
And so we can’t presume anything about a year-to-year demand on the system. It is possible to do a calculation as I have seen written that three hundred people exercising this entitlement to twenty-five trips. At the top value of those trips could run up a cost of in excess of ten or fifteen million dollars.
That doesn’t happen. What tends to happen is a cost that’s closer to three or four million dollars and likewise with the overseas study tours. That’s a cost which could run up to in the order of four million dollars a year. It generally tends to run at the order of about one million dollars. The total cost of the salary changes is in the order of fifteen to twenty million dollars.
And so within those numbers, you see it is possible to present a balanced picture but in large measure these entitlements are demand driven and what we’re trying to do through these measures is close them, remove that demand and ensure that we have a transparent payment system.
QUESTION: What about the public sector changes as well, the departmental…
GARY GRAY: There are nineteen secretarial decisions. Those decisions and the value of those decisions will be determined entirely by the individual pay points that are established by the secretary of Prime Minster and Cabinet and the Public Service Commissioner. And so although the Remuneration Tribunal has presented a migration path that produces substantial over two year pay rises, extremely substantial pay rises, those pay rises occur in trenches and the pay points will vary. So again it’s not possible for me to be completely precise in the actuarial calculations.
QUESTION: …the study tours, what have you got to say about revelations today that Craig Thomson plagiarised his report and it was late coming to you? Does he get a fail? Is this in breach of guidelines? Are you unhappy about this?
GARY GRAY: The bottom line with the overseas study tour is as a consequence of the decisions made by the Tribunal, it’s been abolished. You won’t again have the appearance of members of Parliament going on overseas study tours to look at wine making in Latin American countries. You won’t again have overseas study tours of members of Parliament travelling to Las Vegas to look at gambling.
The important thing here is that we have got rid of this entitlement. Why was it there? It was there because as a consequence of salary like adjustments made in 2004, the government of the day made a non-salary entitlement that had a financial benefit attached to it because people didn’t want to face up to the real decision of the pay rise.
QUESTION: And Mr Thomson?
GARY GRAY: Mr Thomson’s report, which I see reported in today’s paper, is not unlike many reports that get presented. If you have a loose and open-ended entitlement and it’s an entitlement, then I think you can reasonably expect that its utilisation won’t fulfil the highest standards of public administration.
QUESTION: Are you suggesting he rorted the system?
GARY GRAY: No, I don’t think it suggests that at all. It suggests that he took advantage of a system which is available to all members of Parliament. That system has now closed, it’s gone, it will not be there again. That entitlement has been taken away from members of Parliament. It should never have been there in the first place.
QUESTION: So does that mean – if I could just clarify this – that if a member of Parliament now wants to travel overseas for his honeymoon, for example, that he pays out of his salary or there is no way of getting the taxpayer to directly fund that anymore?
GARY GRAY: I’d sincerely hope that if any member of Parliament were going overseas for his or her honeymoon, they would pay for it entirely out of their own pocket. That’s only appropriate. Having said that, for the future, travel available through this study tour option will not be available. Now, that study tour option was an entitlement which vested the day after every election.
So vested in 2004, 2007, 2010. It will not be there following the next election. There will be those members of Parliament with an accrued entitlement and they will be entitled to utilise that, should they choose.
QUESTION: Also you mentioned before that Craig Thomson’s report were not unlike many others. Do you suggest then that most other reports are somewhat creative in their use of Internet resources and plagiarism?
GARY GRAY: I’m suggesting that the requirement for overseas study tours is a requirement that was not as carefully framed as it should be and therefore I find it to be an extremely easy decision to implement to get rid of that entitlement. It should never have been there.
QUESTION: There were also concerns raised that he had plagiarised material for his report.
GARY GRAY: That’s simply not relevant. The point of the study tour is here is a ticket to go on a round the world first class study tour.
QUESTION: [Inaudible]
GARY GRAY: That’s entitled – under the system that was allowed. Under the system that was established in 2004, you got access to what in those days was around twenty-eight thousand dollars of international travel, a twenty-eight thousand dollar untaxed, non-transparent benefit. What the Government did in 2008 was to create a range of transparency measures around those benefits. What the Tribunal has determined to do today is to remove it. That’s a good decision.
QUESTION: Minister, you mentioned that…
QUESTION: The difficulty is going to be to sell this in the public arena. I mean, it’s an easy story to have, you know, pollies pay packet and that sort of thing. How is it – how are you going to market this and actually there’s all these other opaque areas that are now going to be much more transparent, as you say?
GARY GRAY: I think that is the point. The point is benefits that were non-transparent, the lurks and the perks, are taken away. What replaces that is a transparent payment methodology. What also comes into play is the public publication of what ministers, shadow ministers, parliamentarians, get paid. That’s not been previously available. So transparency, I think, helps clean up a range of these inappropriate payment methodologies.
QUESTION: Minister, you mentioned the…
QUESTION: …be able to get your legislation through Parliament?
GARY GRAY: I’m confident of that because the last two sets of changes that we introduced in March and in October met the overwhelming support of parliamentarians and senators. I’ve been extremely pleased by the level of support for these measures, that these measures have enjoyed from the Leader of the Opposition and in fact from all parliamentarians in the mainstream political parties and independents.
So I’m confident that we’ll have more than substantial parliamentarian and senatorial support to get these measures through the Senate in February or March when that can occur.
QUESTION: Minister, you mentioned the figure before of fifteen to twenty million dollars a year. Is that a figure that will be in the coming budget to fund just the parliamentarian pay rises?
GARY GRAY: That’s roughly the value of the parliamentarian pay rise when it cascades through both office holders, allowances of office, ministerial or shadow ministerial, et cetera. That’s roughly the value of it. From the time at which the legislation passes and then the Remuneration Tribunal issues its determination. It hasn’t yet issued a determination. It will do that following the passage of the legislation.
QUESTION: Are you disappointed that you weren't able to do much in terms of kerbing the Gold Pass use of former MPs who do things such as travel back and forward between Broome and a holiday house and things like that?
GARY GRAY: You know those who travel, say, from Perth to Broome to visit their holiday house are making a use of this entitlement for which many believe it was designed.
And I think, in large measure, what that does Nick is it really does demonstrate the nature of this payment methodology. It was seen as an entitlement and I think, reasonably, most members of the public see that on occasions it has been inappropriately used.
There are those members of - former members of Parliament who used these entitlements for nothing but the public good. And they used them to attend community organisations. They used them to support Indigenous communities and they used them at great length for that purpose. And in that context I'm thinking specifically of Fred Chaney.
But there are uses of this entitlement that are simply inappropriate, that will be substantially constrained by the Belcher recommendation to reduce the trips from twenty-five to ten, and then by the decision of the Remuneration Tribunal to close the scheme, to scrap the scheme.
QUESTION: One of the factors in the report is that MPs now get Twitter messages and Facebook and email and mobile phone calls and so on. Do you think that being an MP is a twenty-four hour a day job?
GARY GRAY: It's more than that it's a twenty-four/seven/fifty-two. It's more than a fulltime job. And there are more than one job's in being a Member of Parliament.
Having said that, they are great jobs, they're jobs that bring great benefit, and done well they benefit our nation to a very high degree. There is greater complexity in that work now than when the original work value study was done in the middle 1980s. And I think that's what the Independent Tribunal was getting to when it did its work value study.
QUESTION: In talking transparency, Nick Xenophon today says that he would like to see more transparency in the way in which the decisions are arrived at. He's called for public hearings before the Tribunal then reaches its decision.
GARY GRAY: Nick should have been aware that in fact the Tribunal did seek public input to its deliberations and, indeed, Nick was invited to participate in that process.
QUESTION: But going forward, in other words in future years, when the Tribunal comes to review salaries.
GARY GRAY: I think that's a good idea. I always think that the process of transparency is what creates the best possible processes and then the capacity for independent judgements and determinations is what makes this robust.
QUESTION: So would you look at changing the legislation?
GARY GRAY: I don't think that requires a legislation change.
QUESTION: Did the Tribunal look at the jobs that politicians went into after their careers in Parliament when it was considering the appropriate levels for you know these other perks and things?
GARY GRAY: No. The decisions that were made by the Tribunal refer entirely to the work level of a parliamentarian and that work value study was commenced in the middle of this year, commissioned through Egan's, and it's published on the Tribunal's website and is publicly available.
That work was quite a weighty body of work looking specifically at the work done by a Federal parliamentarian or senator in the current context, not in any future context.
QUESTION: Minister before you go, I was just wondering do you think the way in which the ministerial reshuffle was handled has moved six Cabinet Ministers from the Gillard camp to the Rudd camp?
GARY GRAY: No, not at all. I think the ministerial reshuffle has helped prime the Government and framed the Government for a challenging year in 2012 to focus on jobs, to focus on economic growth, and to focus on the Gillard Government's agenda of making our country a better place.
And on that point...
QUESTION: [Inaudible] [laughs].
GARY GRAY: Of course it's a no, and it's a comment that the Cabinet that the ministerial reshuffles have been about focusing talent and capability in the locations where the Prime Minister and the Government want that talent and that capability.
From time to time that changes and it's appropriate that those decisions should be made by a Prime Minister at the time, at the end of the parliamentary cycle, before the start of the next parliamentary cycle and December/January tends to be the accepted time for making substantial changes to your ministerial team.
Now I have with me here a Gold Pass.
Many people...
[Laughter]
GARY GRAY: ...actually think - many people actually think a Gold Pass is merely a term that is used.
The Gold Pass, its original design you can see it was meant to almost be flipped out of a fob on a train station and then utilised for train travel, which was its original design.
It became over the years a symbol of one of the most inappropriate non-salary, non-taxable measures utilisable by former parliamentarians and a symbol of the opaque way in which parliamentarians paid themselves.
QUESTION: What's it made of?
GARY GRAY: It's made of gold.
QUESTION: Actual gold?
GARY GRAY: It says on the back nine carat gold.
QUESTION: Do you know what it would be worth, the actual item?
GARY GRAY: If you utilised all twenty-five trips over your twenty years of life following that [laughs] it's worth a lot of money [laughs].
No. I don't know the actual dollar value of a Gold Pass today.
QUESTION: What's it - what's it actually - is it minted out of a coin or is it specially minted by The Mint?
GARY GRAY: I make this - well this will become a museum piece. I can guarantee you this will go into either Old Parliament House to be on display in the museum at Old Parliament House or on display up here in our Parliament.
It's a museum piece. The nature and value of it, I think, will be consigned to the history books as it should be.
Thank you very much.
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