JOHN CONDE: Good morning and thank you very much indeed for joining us today.
My name is John Conde, and I'm the President of the Remuneration Tribunal. Mr John Prescott is a member of the Tribunal and is here with me.
Our other member, Ms Jillian Segal, had a longstanding commitment to be interstate today attending the NAB AGM, of which company she is a Director. So she extends her apologies.
Today the Tribunal has issued several reports covering the remuneration of parliamentarians, departmental secretaries and specified statutory officers. These reports and the Tribunal's full statement are provided on our website now, together with three reports by Egan Associates. Mr John Egan, Principle of Egan Associates assisted us with the reviews.
The Tribunal's reports set out its conclusions about appropriate remuneration and other conditions arising from extensive reviews, in fact over some years, of members of Parliament, secretaries of departments and specified statutory officers.
The Tribunal's conclusions in summary are: For parliamentarians, on the basis of a careful and thorough assessment of the work of parliamentarians, the Tribunal considers that parliamentary based salary should be set at $185,000 per annum.
We want to - we are recommending the introduction of additional salaries for shadow ministers, the closure of the Life Gold Pass Scheme, the termination of the present overseas study travel entitlement, a greatly limited severance travel entitlement and to severe the link between pensions under the 1948 Superannuation Scheme and current parliamentarians salaries. And the introduction consistent with the recommendations made by the Tribunal in 1986, of a worker's compensation arrangement for parliamentarians.
I stress that this is the Tribunal's initial report. It does not address all of the matters raised in the report of the committee for the review of parliamentary entitlements. And in the material that is available for you today, there are paragraphs addressing some of those other entitlements which we haven't yet considered.
For secretaries of departments, consistent with our initial report published in March 2010 and based on a close examination of the roles and responsibilities of secretaries, the Tribunal has proposed a new classification structure and a transition path to levels of remuneration which are considered appropriate for these, the most significant, responsible and demanding public offices in the Australian public service.
The proposed adjustments for secretaries, including the timetable of their staged implementation extends to 1 July, 2014 and these are set out on page 7 of the statement released today and, as I said, available for you before you leave.
Also for secretaries a significant but phased reduction in the percentage of total remuneration used to calculate the salaries for superannuation purposes for secretaries - for those secretaries covered by the Commonwealth Defined Benefit Schemes. And as foreshadowed in our initial report for secretaries, termination and redeployment arrangements that are more consistent with the nature of these offices.
For the specified statutory officers, we are proposing remuneration arrangements and transition paths to them, as set out in the attachment to the statement released today. And those levels and those transition paths are consistent with those proposed for secretaries.
Ordinarily the Tribunal would also publish determinations giving legislative effect to its conclusions. However in the circumstances associated with the reviews, in particular of members of Parliament and secretaries, the Tribunal has not yet made the appropriate determinations.
The reasons for this vary between the groups of offices concerned. First in regard to parliamentarians, it is the arrangements established by the Parliamentary Contributory Superannuation Act 1948 that are at the root of the Tribunal's decision not to determine any aspect of parliamentary remuneration and other entitlements at this juncture.
Under the 1948 Act, retired parliamentarians have their base and additional pensions indexed to the base and additional salary of current parliamentarians. The August 2011 amendments to the Remuneration Tribunal Act enabled the Tribunal to distinguish the amount of parliamentary allowance from parliamentary based salary. This means that we can now ensure that adjustments in the basic pension driven by changes in the parliamentary allowance are delinked from changes in base salary.
However, the specific matter of concern to the Tribunal is that the amendments to the Act do not enable the Tribunal to ensure the changes in additional salaries do not also flow-through to the additional pensions of qualifying retired parliamentarians. Therefore, any fluctuation in the base salary will have flow-on effects to the additional salaries of office holders.
The Tribunal will, therefore, not determine a new parliamentary base salary at the level proposed in the report while it results in windfall gains in the pensions of retired parliamentarians, however justifiable that increase maybe for current parliamentarians.
The Tribunal has conveyed its position to the Government and in response the Special Minister of State, the Honourable Gary Gray AO MP, has acknowledged the Tribunal's concern and has advised that the Government intends to quote: Introduce legislation as soon as possible in the 2012 autumn sitting to put in place the necessary amendments to limit the flow-through of salary increases for Minister's of State and parliamentary office holders to additional benefits under the 1948 Act, unquote.
In its initial report the Tribunal has also proposed changes to the present entitlements derived by parliamentarians from the Life Gold Pass Act. We recommend that amongst other things, that the Life Gold Pass Scheme be abolished prospectively so that it would have - so that it would not be available to those who enter Parliament at, or after, the next Federal election.
In issuing this initial report today the Tribunal has completed only the first phase of its review of parliamentarian - parliamentary remuneration and entitlements.
The Tribunal has said previously that it considers that existing parliamentary entitlements should be rationalised and separated into two distinct streams. The first, remuneration; those entitlements which provide some sort of personal financial benefit and second, business expenses; the costs incurred in undertaking their duties and responsibilities as a parliamentarian.
To date our work has indicated that the achievement of this objective of separation will be a considerable task and therefore we intend to publish, as necessary, a further statement or statements as our work on remuneration terms and conditions and other matters progresses.
In regards to secretaries of departments, we've published part 2 of the report of the review of secretaries today. Part 1 of the report, as I said, was published in March last year.
Today's report represents the Tribunal's conclusions on an appropriate classification structure and remuneration arrangements for secretaries. In part 2 we confirm the classification structure proposed in the part 1 report. We set all the specific pay points associated with the classification structure. We lay out the anticipated transition path of pay points to that developed classification structure. And we finalise other associated terms and conditions for secretaries.
However, the tribunal has not yet determined any of these aspects. The reasons for this again stem from the provisions of the Remuneration Tribunal Act. However, unlike parliamentarians, the reasons do not turn on any aspect of the existing terms and conditions of secretaries.
The August 11 amendments to our Act, besides affording us the responsibility for determining certain aspects that parliamentarian's remuneration and conditions, also extended the tribunal's jurisdiction to secretaries.
Responsibility for setting remuneration arrangements for individual secretaries is in effect shared now between the tribunal and the secretary of the Department of Prime Minister and Cabinet, with a consultative role for the Public Service Commissioner.
In view of the standing of the office of secretary and the scope and the extent of the changes in the arrangements governing the determination of their remuneration terms and conditions, we've decided that we would publish our conclusions, but would refrain from giving effect to them by determination until we are confident that the matters we have proposed and the arrangements by which they are to be given effect are settled and capable of operating in a timely and coordinated manner.
In this regard, we are mindful that, just a few days ago, on 12 December, the Prime Minister announced changes to the Administrative Arrangements Order, which are likely to bear on the responsibilities of individual secretaries. The tribunal would need to take these variations into account, as well as others that have been made since the publication of its part 1 report, before settling individual secretaries to the classification structure.
We have discussed these intentions with the secretary of the Department of Prime Minister and Cabinet, conscious of his responsibilities under the Act. And we are confident that the period between the presentation of this part 2 report and giving effect to its conclusions by determination will contribute to the effective operation of the arrangements.
To this end, we have included, you will find, as an appendix to the part two report, a draft of the intended determination. And, apart from the Department of Prime Minister and Cabinet and the secretary of the Department of the Treasury, the draft does not include the allocation of secretaries to individual classifications. The tribunal expects to have made its determination no longer than 31 March, 2012.
And finally, the specified statutory officers: we have also issued a statement covering conclusions of the review of the specified statutory officers. There are five such officers. Each is singular. Each has demanding responsibilities and each is invested with a high degree of autonomy. These five officers are the Chief of the Defence Force, the Commissioner of Taxation, the Chief Executive Officer of the Australian Customs and Border Protection Service, the Auditor-General for Australia and the Australian Statistician.
On the basis of the broad alignment between the remuneration proposed for individual specified statutory officers and that proposed for secretaries, we have concluded that it would be inappropriate to reflect our SSO conclusions in a determination before we have settled the determination for secretaries. Accordingly, our determination of remuneration for each of the specified statutory officers will have the same date of effect as the determination we make in respect of secretaries. And just to repeat, we would expect that to be concluded by 31 March, 2012.
As I mentioned earlier, the full versions of all of these reports and the three reports of Egan Associates, should now be available on the Tribunal's website. Copies are available for you this morning of the three Tribunal reports and of the Egan Associates report on parliamentarians. There is also available for you today, in hard copy, a summary statement setting out these conclusions in respect of the three reports.
And as I mentioned at the beginning, this has been work which has spanned several years. And I would just acknowledge not only my present tribunal colleagues, but former tribunal colleagues, Mr John Allen and Ms Janet Grieve, and also the work of the secretariat. We have a very small, five or six person secretariat in Canberra. And this has been a significant amount of work for them during this period. Two of our colleagues are here, including the secretary, Mr Derren Gillespie, for whom I make - single out special thanks.
Thank you again for your attendance. And if you like, Mr Prescott and I would be happy to answer some questions.
QUESTION: Mr Conde, you say this has taken several years. Why does a review like this take so long? And by closing the Life Gold Pass, especially determination of [inaudible], do you acknowledge, in doing that, that they have been rorted over the years by a number of politicians?
JOHN CONDE: Your question in two parts. Why has it taken the time that it's taken? Because we did a thorough job would be my principal answer. That work involved assistance from a consultant. In the case of secretaries and SSOs, we interviewed, at the time, all of the officers. In the case of parliamentarians, we interviewed a sample of I think twenty-eight or thirty parliamentarians from both houses and all parties, including independents.
And the tribunal's responsibility for this was only given effect through legislation earlier this year. So the approach by the government to the work, in the case of parliamentarians, an initial assessment was made by the Committee for the Review of Parliamentary Entitlements. That reported early in 2011. And then legislative change gave responsibility to the tribunal to conduct a study and to report. So…
QUESTION: [Interrupts] So you were only allowed to do this because of the changes in the legislation. Is that what you're saying?
JOHN CONDE: Correct.
In the case of secretaries, the work was commenced and, as I say, part 1 report was published in March, 2010.
The second leg of your question, in reviewing what we have reviewed, we've just taken a view of the appropriateness or otherwise of particular entitlements for the work of the parliamentarian. And we've concluded - you'll find comments about Life Gold Pass and about overseas study travel that we felt it was no longer appropriate.
QUESTION: So did you finally see a number of occasions that it wasn't appropriate that these study tours or examples of study tours not being appropriate? Was it widespread or was it just a few - can you just give us a sense of it?
JOHN CONDE: Our decision was not based on how it had been used either appropriately or not appropriately. Our decision was based on just that this was not an entitlement that should continue to form part of the overall package for a parliamentarian.
There's a very considerable appendix in the parliamentarians report, setting out the history of the Life Gold Pass. And it goes back decades. And it's just - it's an anachronism.
QUESTION: Mr Conde, how long do you think the [inaudible] will last, given that the constant argument of the parliamentarians is that they could make far more money, far much - a lot more money in the private enterprise type industry? Is there going to be a continual pressure to push the remuneration up, given that they say that we're running a country and everyone else just runs businesses?
JOHN CONDE: I think our view was that this is an appropriate level for a backbencher salary. It's necessary to have a salary sufficient to attract and retain people of capacity. But no-one would suggest that this is a level of remuneration that would rival private sector employment.
And indeed, if you read the report from Egan Associates, we have chosen a number at the bottom of the range that he concluded was an appropriate range for a backbencher. You'll find in his report a range of one-eighty-five to two-fifty-thousand. So we've chosen the bottom of the range.
QUESTION: Just for the viewers at home, would you be able to give us a very simplistic outline of your findings? Just without all the processes and - just put it on a platter for us briefly. What have you found and where are we at with the payment?
JOHN CONDE: Well I thought I intended to do that, I'm sorry, in my opening remarks. The base salary change, the introduction of additional salary for shadow ministers, closure of the Life Gold Pass, termination of the overseas study travel entitlement, limited severance travel, severing the link between pensions under the old 1948 Superannuation Scheme and the current parliamentarian salaries and the introduction of a Workers' Compensation Scheme.
JOHN PRESCOTT: One of the documents that you will be able to take with you is in fact the summary of the nature of the [inaudible] inquiry.
REPORTER: That's all right; we often like it verbally as well.
QUESTION: Mr Conde you haven't mentioned anything about the Prime Minister's pay, perhaps that's in the report but it was widely reported as well that she would be in line for a pay rise under this review. Is that correct?
JOHN CONDE: It is correct that there is a scale and again you'll find it in the material, of additional salaries for - recommended by the tribunal for ministers and determined by the tribunal for other office holders. That's in the report, yes I mean if the base salary increases the additional salary increases in the same percentage as it has in the past.
QUESTION: So what is the salary increase then for the Prime Minister?
JOHN CONDE: I can tell you. It would be four-hundred-and-eighty-one thousand.
QUESTION: Mr Conde you say that you've chosen the lowest range but doesn't this place her above the President of the United States?
JOHN CONDE: We're not talking about any individuals, we're talking about offices and in our view that is not an unreasonable salary for the Prime Minister of Australia, whoever he or she may be.
QUESTION: Even if it's higher than comparable countries overseas?
JOHN CONDE: Well that's our conclusion.
QUESTION: Some people in the public might think they have had to pay too much for these increases. What would you say to those people?
JOHN CONDE: That's not our view, that's not our conclusion and it's not a conclusion supported by the research and consultancy that assisted us.
QUESTION: Has there been a recognition within the tribunal that perhaps political ranks have been depleted by a lack of pay, or perceived lack of pay in the past?
JOHN CONDE: I said that we concluded that it was important to have a level of remuneration sufficient to attract and retain people from all walks of life to serve in the parliament. And we think that yes, it would - that the backbencher rate had fallen behind and needed to be re-based.
QUESTION: One last question?
JOHN CONDE: But none of these is taking effect until there is legislative change. So the answer to the second leg of your question sir is there is no change as a result of this today.
QUESTION: Given current economic concerns, why now?
JOHN CONDE: That's a very good question, but there is never a right time for this and so there has to be a time and it's been a long time coming. We've concluded our work and this is our conclusion.
QUESTION: Given it has been so long coming, couldn't we easily wait until conditions improve?
JOHN CONDE: I don't know the answer to that question. We think it's appropriate to deliver the results of our study and we would anticipate it would become effective early in 2012.
QUESTION: A question for Malcolm please?
QUESTION: The question is that the parliamentarians are meant to set an example for the rest of the community. There is always the trade unions of course. What's that and the parliamentarians are meant to set an example for [inaudible] so that the trade unions don't go overboard in their own demands. Is that a factor that you take into consideration in setting your levels?
JOHN CONDE: I think in our view at this level of base salary for a backbencher, the backbencher would be continuing to set an example of restraint compared to the work they do.
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