Submissions closed last week for a senate inquiry into the Remuneration and Other Legislation Amendment Bill 2011, which quickly passed the House of Representatives in March. The bill’s innocuous title belies a consequential proposal to shift responsibility for the pay of our politicians and senior public officials from the government to the Remuneration Tribunal.
The bill’s progress has generated little remark — the inquiry only received four submissions – but its effects will ultimately spark heated debate.
The Treasury’s “explanatory memorandum” states the bill will have “no impact on the budget”. But the likely outcome is a significant increase in pay for members of parliament — state members too, whose remuneration is often fixed with reference to their federal colleagues.
The Remuneration Tribunal worries that “political manoeuvrings” have kept politicians’ pay arbitrarily low. And it believes senior officials should be paid “substantially above the current levels”.
Federal backbenchers earn more than $136,000 a year, along with a car, business-class air travel, generous travel allowances and a diary filled with pre-paid lunches and dinners. The secretaries of Treasury, Defence and Prime Minister and Cabinet each have total annual remuneration of $523,860; the other 17 departmental secretaries make do on $490,100 each.
Absent a market, the “right” level of pay for politicians will remain elusive. But taxpayers do need to pay enough to ensure a parliamentary career is attractive to all able Australians. Providing meagre pay simply ensures the parliament is dominated by people with money.
Evidence suggests we have struck the right balance. Australian politicians, many of great talent, have hailed from both humble and high-falutin’ families. Journalists, train drivers, farmers, house wives and lawyers have all found their way into Australian parliaments. And for a long time parliamentary benefits relative to ordinary incomes have remained broadly consistent.
Moreover, debates about politicians’ pay often forget that 95% of Australia’s nine million or so taxpayers have taxable incomes below $130,000 a year; and full-time employees have median incomes of about $1000 a week. In this light, it is difficult to argue politicians are not well paid. It should not be surprising that proposals to pay our public representatives more provoke anger.
No one denies that many politicians work hard, far harder in fact than many in the corporate world who pay themselves salaries many magnitudes greater. Yet none of these alternative careers provides the same potential power, prestige or the opportunity to make a lasting difference. These substantial non-pecuniary benefits must be considered.
That so many politicians have curtailed or eschewed more highly paid privat- sector careers is a reminder that career choices, especially political ones, are not driven mainly by money.
Ideally, we want our politicians to work for the common good rather than their own. By increasing dramatically the level of parliamentary remuneration we risk encouraging, on average, greedier and less selfless individuals to represent us.
Nevertheless, to dispatch the confusion and routine bickering about parliamentary pay, politicians’ remuneration should be fixed to a multiple of the median full-time wage, as determined by the Australian Bureau of Statistics.
Politicians’ pay increases would then be tied to the living standards of ordinary taxpayers. Political decisions would be more aligned with the common good rather than powerful vested interests, subsidies to whom affect average rather than median incomes.
That multiple should be three, a round figure that ensures politicians receive an immediate pay rise (to about $150,000), and one that compensates them for having their incomes shackled to the fortunes of ordinary people, rather than bankers and barristers and CEOs. Moreover, such a change would lift politicians’ incomes closer to senior officials’, which whatever the Remuneration Tribunal might think, are high enough already.