Politicians pay rise

ABC Programme PM - Tuesday, December 7, 1999 6:18

COMPERE: Other public employees may have to go through long drawn out industrial battles to get a pay rise but Federal MP's are about to get an extra five per cent in their pay packets, and there'll be another five per cent on July the 1st. The recommendation from 10 per cent all up comes from the Remuneration Tribunal, the body that's supposed to put the decisions on politicians pay at arms length from the MP's themselves.

For a back bencher the base rate will rise to around $90,000. MP's haven't received a pay rise since 1996 and the Prime Minister, John Howard, has already made it clear that he thinks some increase is overdue.

Our chief political correspondent, Matt Peacock, joins me now.

Matt, how does this all work?

MATT PEACOCK: Well, Mark, as you've said the MP's haven't had a pay rise since 1996. Originally the Remuneration Tribunal was given the job of determining MP's pay because it's such a hot political issue that it was deemed necessary to keep it at a bit of arms length rather than have the politicians just decide it themselves, and so up until now it was that the Remuneration Tribunal used to set the wage and it was set at a level of a top senior public servant at Band 2.

Now the problem with that is over the last three years a lot of these public servants have been striking their own deals with Enterprise Bargaining and so the poor old pollies have been slipping back a bit, and still sitting on their base rate of $80,000 or so. $81,356 to be precise.

So today the Remuneration Tribunal Report is recommending not what Minister David Kemp did try on earlier this year, a recommendation that basically it be pegged at something like half a Federal Court Judge's salary, but instead they're pegging it to what's known as the "average weekly ordinary time earnings", AWOTE as the acronym.

Now, you might remember some time ago there used to be an acronym known as MTAWE which was the one that was thrown around in the GST debate about where pensions should be struck, and that is the way that they calculate a pension at the moment. It's set according to the male total average weekly earnings - MTAWE.

This one is AWOTE and that turns out a little bit better if you take the line at September of this year AWOTE is 754, MTAWE is 728. So it gives you some idea. Nonetheless, they're not pegging it at Federal Court Judges. It is something, as you said, that the Prime Minister said is long overdue.

One man that's been hostile certainly to the earlier suggestion by David Kemp this year that it be pegged to Federal Court Judges is the Independent Member, one of the few politicians that has expressed concern about how these wages are struck, Peter Andren, the Member for Clare [phonetic]. And he's still suggesting that it be set at the MTAWE rate that pensioners get and I spoke to him earlier today.

PETER ANDREN: We put a submission in from our office about a month ago suggesting that it be linked to the male average weekly earnings and in succession so, too, is the pension linked to that. Now what they've done they've gone for the higher figure and that, in essence, means that they're basing it on about $90,000.

MATT PEACOCK: Compared to what?

PETER ANDREN: Well, at the moment we're on about $81 but the essential thing is that they've linked it to something the people know nothing about. Had they gone along the lines I was recommending - and I am pleased that they've ...

MATT PEACOCK: That's still better than linking it to the Judges, isn't it?

PETER ANDREN: It certainly is. But the haste at which the government's releasing this and getting its head down, as you said, is quite remarkable. I think that the pensioners are now likely to turn around and say well hey, if it's good enough for you to link the Prime Minister and MP salaries to full time adult ordinary time earnings, what about us? And I think had they just linked it to the MTAWE, the male average weekly earnings, I think it would have been a far simpler and a far more transparent process.

MATT PEACOCK: And what precisely is the difference, without getting too technical on us? I mean MTAWE or AWOTEs?

PETER ANDREN: Well, I suggested that the adjustment that would have been required under the MTAWE, the male average weekly earnings base, would have been about 7.2 per cent to catch up in that gap with no pay rise since '96. We're looking at 10 per cent on this base and the difficult thing is, though, that there is ... the public still won't understand what's happening.

They're going to be giving politicians a bigger increase than pensioners are going to be getting. It's going to happen at different times of the year to the pension increases. It would have been so neat to have done it at the same time, the same rate. If there's no inflation and no pension increase, so too would that apply to MP's.

COMPERE: Peter Andren, the Independent MP for Clare. And Matt Peacock, how will this play with the battlers, do you think? This clearly puts ... it points out yet again, of course, that most MP's are way up in the high income bracket, at least as defined by whether or not you pay the Timor tax, for instance.

MATT PEACOCK: Well, exactly. If you remember the Prime Minister and the headlines at the time, anybody earning over $50,000 was regarded as high, and if you're earning $80,000 I guess you're heading towards the millionaire level according to that equation. It won't play over ...

COMPERE: And now they're going up to $90,000.

MATT PEACOCK: It won't play over at all well, Mark, obviously and that's why the government's going to keep its head down. A spokesperson for Minister Fahey, the Minister for Finance who's running this show, says that we believe it's a sensible and moderate increase and I wouldn't mind betting that will be the only comment you'll get out of that office, and I don't think you'll get too many other politicians saying too much about it although it will, of course, have multi-party support.

COMPERE: And is it across the board? Ten per cent of Minister's salaries would be a good deal more than 10 per cent of back bencher's salaries presumably?

MATT PEACOCK: As I understand it that all flows through so yes, you're right.

COMPERE: Matt Peacock, thank you very much indeed.