There is something seriously amiss with Australia’s parliamentary salaries. Alan Austin considers the problem and possible solutions.
ON HIS RESULTS as Treasurer and now Prime Minister, Scott Morrison’s salary should be about $183,000 — one-third of the current level. That should increase steadily as his performance improves. Other parliamentary salaries should be adjusted commensurately. Let’s examine why.
High salaries for members of parliament (MPs) are purported to:
- attract high calibre candidates;
- ensure MPs are not distracted by their financial situation; and
- compensate job insecurity.
None of these applies today.
Security of tenure
Kevin Andrews has been in the lower house for 28 years and counting. Kim Carr has been a Senator for 26 years. Tony Abbott was there for 25 years — it just seems longer.
The recent election proved most parliamentary positions are quite secure. No-one tried harder to get turfed by his electorate than Nationals member for Dawson George Christensen. He spent more time with his girlfriend in the Philippines than attending committee sessions in Canberra. Yet he was returned with his margin increased by 11.2%.
Only three Coalition MPs seeking re-election failed. No front benchers lost.
The failed Remunerations Tribunal
The current system of setting salaries – by a tribunal comprising three worthy citizens appointed by the governor general – is broken. To be effective, the three should be drawn from sectors most aware of the grim realities of life. A fair group would be a suburban small business owner, a dairy farmer and an aged pensioner. After four years or so, these should be replaced – to eliminate the risk of entrenched prejudices – by a nurse, a corporate executive and an NDIS beneficiary. They, in turn, can be replaced by a university professor, a bus driver and someone long-term unemployed.
Instead, the tribunal comprises three high-income corporate executives. The current president sits on boards in the coal, energy and property sectors. He has been on the tribunal for 21 years.
Our discussion at this point crashes into another entrenched evil in Australia: why do company directors willingly offer chief executives earning more than $20 million an extra million or two, while simultaneously campaigning to reduce annual salaries for employees below $35,000?
As in the corporate world, MPs should be rewarded for exceptional success. John Howard could have claimed a bonus in 1996 for reforming Australia’s gun laws. That took courage and effort. Unfortunately, he achieved little else in the next 11 years.
Kevin Rudd could claim a hefty bonus for averting the recession which cost thousands of lives in comparable countries where it took lethal grip. His management of the global financial crisis from 2008 onwards saved citizens billions in potential losses and earned for Australia the admiration of the watching world.
The tribunal which assessed Rudd’s income in 2008 probably got it right at $330,356. That was seven times Australia’s average wage and nearly 12 times the minimum. It was higher than most other national leaders, which was fair given Rudd’s actual accomplishments. Australia became world-famous for its collaborative foreign policy, the formal apology and rejoining the world on climate action. Australia achieved the world’s best-performed economy for the first time in 2009.
Julia Gillard also earned her 2013 salary of $507,338. She received far more accolades than any previous prime minister and more than any contemporary national leader.
Internationally, Australia under Gillard boosted overseas aid, was voted a seat on the United Nations Security Council, asked to chair the G20 group of the major global economies and invited to host the Pacific Island Forum. Two of her speeches were – and are still – widely acclaimed.
Domestically, her Government passed more bills than any previous parliament. It initiated the NDIS and other major reforms. It achieved the world’s best or near-best outcomes on wealth, productivity, credit ratings, business freedom and overall economic management. All this in the face of the most destructive Opposition and media in memory.
Monumental tribunal failures
Then came Tony Abbott whose failure was so comprehensive that no salary increase was warranted. In 2014 none was given. Through 2015, Australia’s economy collapsed further, with the jobless climbing above 6.0% and growth down to 2%. Australia’s standing in the world plummeted to an all-time low after damaging reports on abuses of refugees and illegal payments to people smugglers. Plus a series of excruciating gaffes on the world stage.
A major adjustment to parliamentary salaries – downwards by about 40% – was clearly indicated. Instead, the tribunal maintained high salaries through 2015.
On January 2016, replacement Prime Minister Malcolm Turnbull and his regime were awarded a 2% pay rise, despite no justification whatsoever based on outcomes. Throughout Turnbull’s tenure, the economy declined even further relative to the rest of the world, with the jobless rate still at 6% in January 2016.
Increments since then – bestowed automatically – give Scott Morrison an annual base salary from next month of $549,229. This is truly a screaming obscenity. He is paid 66% more than Kevin Rudd for outcomes now close to the worst in the developed world.
According to London-based IG Group, Morrison now gets the highest salary of any elected leader anywhere. (This may not be true in U.S. dollars, however, given the Aussie dollar’s 24% devaluation since the Coalition gained office.)
This appalling waste can be multiplied a hundred times, as the PM is not the only ineffective MP pocketing record pay. It is widely accepted that this is 'the most corrupt and incompetent' front bench in memory, beset with the inevitability of 'a rolling succession of ministerial disasters'.
Pay for performance
It should not be beyond the wit of the visionaries in the political parties and commentariat to formulate a system for paying MPs according to productivity.
Many independent rankings measure and compare government output. These include indices on infrastructure investment, global competitiveness, freedom from corruption, rule of law, democracy, business environment, quality of living as well as the economic rankings listed above under Gillard’s accomplishments.
We may revisit this topic later. Suggestions from readers – posted in the discussion section below – are most welcome.
Meanwhile, let’s hope Morrison enjoys his Champagne. We are paying for it.
You can follow Alan Austin on Twitter @AlanAustin001.
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