I had the decidedly unpleasant experience a couple of weeks ago of having to vote on how much of a pay increase I should receive, when a motion was brought on in the Senate to disallow the latest decision from the Remuneration Tribunal giving a 7 per cent increase to federal parliamentarians.
I was about to vote against this increase until I discovered during the course of the debate in the Senate that it would also have meant voting against pay rises for a number of Public Service positions. I am comfortable with voting against my own pay rise, but believe it would be very unfair to knock off other peoples’, even though I know I would look way better in the populist press for doing so (particularly given that there was no way a majority of the Senate was ever going to oppose it). I have some ability, however subjective, to assess appropriate pay for the work that I and my Senate colleagues do, but neither I nor any other Senator has the experience to assess the merits of pay rates for the range of other public service positions that were affected. You can read my speech on the MP’s pay debate by clicking on this link.
I have stated a number of times before that I believe politicians are already paid well enough. The notion that there has to be significantly better pay or entitlements to attract better people into politics is ludicrous. I very much agree we need high quality politicians, and people of quality shouldn’t be deterred for financial reasons, but frankly there is already an over-representation of people in Parliament who come from high earning backgrounds and I have to say the quality of some of them is less than desirable.
One of the growing problems in federal parliament is the narrowing range of people and professions that MPs are drawn from. This problem is most certainly not due to insufficient pay.
The basic salary of federal Parliamentarians is linked to a specific level of public service office (Reference Salary A under the Public Executive Office Classification Structure, if you really want to know). This pay level is determined by a separate body – the Remuneration Tribunal. This latest pay rise for federal MPs brings the base salary up to around $119 000, a rise of 7 per cent, which is well above the inflation rate and the current average annual level of wage increases. More detail is available in this research note from the Parliamentary Library.
Despite the salary rates being determined by the Remuneration Tribunal, the government can choose not to accept the Tribunal’s advice, and either House of Parliament has the ability to disallow the determination flowing from the Tribunal’s recommendation.
The Remuneration Tribunal has been in place since 1973, and from a politician’s viewpoint there’s a lot to be said for just blindly accepting whatever they come up with, but the fact is that Tribunal determinations have been voted against more than once in the last 30 years. However, as far as I know, there has been no disallowance of the Tribunal’s determination since it was coupled to the salaries of non-politicians.
There were valid reasons to leave the pay determination in place, not least that it is decided by the Remuneration Tribunal, rather than politicians, and if you’re going to adopt the very sensible approach of having a separate body determine these things, it makes sense not to then intervene too often. However, I think there are some special circumstances which did merit the 7 per cent increase being declined, (if it had been able to be separated from the pay rises for other people).
A strong reason to take the alternative approach and reject the pay increase is the growing wealth gap in Australia and a serious lack of recognition of just how low the pay of most Australians is. If you were to go on what is often written in the mainstream media, you could be forgiven for assuming that an annual income of around $75 000 is a fairly middle of the road amount. This is exacerbated by the figures most often used in conjunction with the term ‘average weekly earning’, which does not mean what many people often assume it to mean – that is, an amount that around half of Australians earn.
The mean average weekly earnings for people in full-time jobs is about $55,000 a year on recent statistics. If you take into account all workers, full-time and part-time, that average drops to $42,000. But the median average, which is the midpoint for all people in full-time work is only $900 per week, or less than $47,000 per year. If you take that to include all people in all paid jobs, full or part-time, it drops to $36,500.
So half of all Australians in paid work earn less than $36,500 a year. Federal parliamentarians earn about 3¼ times that amount and Bureau of Statistics figures show that only 3 percent of people earn more than $104 000 per year. So it is pretty clear that parliamentarians already earn more than all but a tiny minority of Australians.
Of course, statistics can be misleading, and there are factors such as dual-income households, people consciously choosing to be in part-time work and all sorts of other things. But the bottom line is that the majority of Australians earn a lot less than is generally assumed, given the way average earnings figures are often portrayed.
The politicians’ pay debate has now shifted to proposals to increase the superannuation entitlements for ‘new’ MPs – that is those who were first elected in 2004 or later. Contrary to some media reports, what is being proposed is not to return superannuation entitlements back to the exorbitant and unjustified levels that existed prior to 2004, but a much more modest proposal to increase the employer contribution from the current 9% to the 15.4% level which currently applies to federal public servants and politicians’ staff. Whether this is justified is another matter, for similar reasons to what I have already mentioned in regard to salary levels.
(I should note that as I am an ‘old’ MP, entering the Senate in 1997, I am still under the old superannuation arrangements and won’t be affected by the proposed change).