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REMUNERATION AND OTHER LEGISLATION AMENDMENT BILL 2011

                                         2010-2011




          THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA




                                          SENATE




   REMUNERATION AND OTHER LEGISLATION AMENDMENT BILL 2011



                SUPPLEMENTARY EXPLANATORY MEMORANDUM


                     Amendments Moved on Behalf of the Government




(Circulated by authority of the Special Minister of State for the Public Service and Integrity,
                                 the Hon Gary Gray AO MP)
    REMUNERATION AND OTHER LEGISLATION AMENDMENT BILL 2011


OUTLINE
The Remuneration and Other Legislation Amendment Bill 2011 (the Bill) expands the
jurisdiction of the Remuneration Tribunal (the Tribunal) to determine the base salary of
parliamentarians and the remuneration of Departmental Secretaries and other offices
established under the Public Service Act 1999.

The Parliamentary Contributory Superannuation Act 1948 (the 1948 Act) provides
superannuation arrangements for persons who joined Parliament prior to the general election
on 9 October 2004. It establishes a defined benefit scheme which is known as the
Parliamentary Contributory Superannuation Scheme (PCSS). An eligible parliamentarian's
superannuation pension payable under the PCSS is expressed as a percentage of
`parliamentary allowance' as defined in the 1948 Act. When the parliamentary allowance
increases, the pension paid to former parliamentarians under the 1948 Act also increases.
Electorate and other allowances such as travel allowances are excluded from the calculation
of superannuation contributions and benefits.

The Report of the Committee for the Review of Parliamentary entitlements recommended
(Recommendation 7) that the government take preventative measures so that any folding-in
of allowances does not flow to the retirement benefits of members of the PCSS.

If the Tribunal decides to incorporate, for example, electorate or other allowances into base
salary, these amendments would give the Tribunal the discretion to determine that those
amounts do not form part of the salary used to determine contributions of current members
and benefits payable to former members under the 1948 Act. Those amounts would,
however, form part of the salary for superannuation purposes of members elected at the
October 2004 and subsequent elections.

FINANCIAL IMPACT STATEMENT

The measures proposed in this Bill have no direct impact on the budget.
Parliamentary Contributory Superannuation Act 1948

Amendment 1
This amendment inserts a new paragraph into the definition of `parliamentary allowance' in
the Parliamentary Contributory Superannuation Act 1948. New paragraph (d) of the
definition of `parliamentary allowance' provides that such an amount includes parliamentary
base salary, within the meaning of the Remuneration Tribunal Act 1973, less any portion
determined under section 7(1A) of that Act as not being parliamentary allowance for the
purpose of the Parliamentary Contributory Superannuation Act 1948. This means that a
person covered by the 1948 Act would not be required to make contributions on the portion
determined under section 7(1A) of the Remuneration Tribunal Act 1973 and they would not
be entitled to receive superannuation benefits on those amounts.

Parliamentary Superannuation Act 2004

Amendment 2
This amendment inserts a new paragraph into the definition of `parliamentary allowance'.
New paragraph (b) provides that `parliamentary allowance' includes parliamentary base
salary within the meaning of the Remuneration Tribunal Act 1973. Those amounts would
form part of the salary for superannuation purposes for members of the 2004 Act.

Remuneration and Allowances Act 1990

Amendment 3
This amendment inserts a definition of `parliamentary base salary' into the Remuneration and
Allowances Act 1990. The new definition provides that `parliamentary allowance' means
parliamentary base salary within the meaning of the Remuneration Tribunal Act 1973.

Remuneration Tribunal Act 1973

Amendment 4
This amendment inserts a definition of parliamentary base salary into the Remuneration
Tribunal Act 1973. The new definition provides that parliamentary base salary means so
much of the allowances determined by the Remuneration Tribunal under subsection 7(1) of
the Remuneration Tribunal Act 1973 as represents the annual allowance payable for the
purposes of section 48 of the Constitution and is identified in the determination as base
salary.

Amendment 5 - After subsection 7(1)
This amendment inserts a new subsection 7(1A) into the Remuneration Tribunal Act 1973 to
provide that the Remuneration Tribunal may determine that a portion of parliamentary base
salary determined under subsection 7(1) of the Remuneration Tribunal Act 1973 is not
parliamentary allowance for the purposes of the Parliamentary Contributory Superannuation
Act 1948. Such an amount would therefore not be `parliamentary allowance' for the purposes
of the 1948 Act and a person covered by the 1948 Act would not be entitled to receive
superannuation benefits based on those amounts.

Amendment 6
This amendment would amend clause 19 of Schedule 2 of the Bill to insert a reference to the
new subsection 7(1A) referred to in amendment 2.
Amendment 7
This amendment would amend clause 20 of Schedule 2 of the Bill to insert a reference to the
new subsection 7(1A) referred to in amendment 2.