End of entitlement culture must start with MPs

The Australian
Feb 24 2014
Illustration: Eric Lobbecke

IN this new age dedicated to ending the culture of entitlement, the Prime Minister and the Treasurer have, rightly, asked all Australians to curb their dependence on government largesse.

Last week, Employment Minister Eric Abetz asked public servants to help repair the budget bottom line. He asked them to choose between cutting their entitlements and freezing future wage rises.

In the private sector, workers are being urged to make sacrifices in response to a deteriorating budget position and a fragile economy. There will be no more taxpayer handouts.

The public service, already subject to efficiency dividends, should not be exempt. And the place to start is not with Australia’s 165,000 federal public servants, but with Australia’s 226 federal MPs. It is scandalous how much money our politicians shell out to themselves in salary and entitlements each year.

The annual average increase in an MP’s base salary over the past 10 years – including a one-off lift of 31.3 per cent in 2012 – is 6.9 per cent. Most workers can only dream of such wage increases. The base salary for MPs is $195,130 a year. MPs now earn 2.8 times the average annual wage. Not bad if you can get it.

But this is only a “base” salary. They are also paid an electorate allowance of between $32,000 and $46,000 each year to reimburse them for “costs” incurred as an MP. It is treated as taxable income. MPs are also entitled to a private-plated vehicle for “official business” or $19,500 each year in additional allowances to meet transport costs.

MPs have an electorate office and a minimum of four full-time staff to work at their discretion, along with separate printing, communications and publications allowances. Attorney-General George Brandis spent almost $13,000 on books, magazines and newspapers over four years. Even an MP’s personal home phone is paid for.

Domestic and overseas travel for “study” is paid for. MPs earn a tax-free $268 for every night spent in Canberra or other rates for “official business” elsewhere. Whatever they don’t spend, they can pocket. Family members are given free travel. Some former MPs have a Life Gold Pass that grants them free travel anywhere in Australia for “non-commercial” business.

The salaries and entitlements paid to Australian politicians are among the most generous in the world. The pay is so good, especially for those in the top echelons, that it pays better to serve here than it does in the US, Europe or many Asian countries.

The Australian head of government earns an annual salary, allowances and entitlements that are more generous than the package enjoyed by the most powerful head of government in the world: the US president. Or the British prime minister, German chancellor or French president. The Australian prime minister earns $507,338 in annual salary and allowances combined. But when their electorate allowance is added – a taxable payment that can either be spent or pocketed – the salary banked by Tony Abbott and Kevin Rudd was $539,338.

The US president earns $US400,000 each year – about $445,000 in our dollars. Even the British prime minister takes home a smaller ministerial and parliamentary salary of just 142,500 pounds – about $264,000 in our currency.

I don’t doubt that our prime ministers work hard, make considerable sacrifices and are faced with difficult and complex challenges. They should be provided with a residence in the national capital, be able to travel as required and have staff to support them. But they do not deserve to be one of the highest paid heads of government in the world.

Indeed, the deputy prime minister ($432,017 per annum), treasurer ($397,869), cabinet ministers ($368,599) and leader of the opposition ($392,991) earn more than many heads of government.

Although the independent Remuneration Tribunal determines allowances paid to MPs, and legislation limits the authority of the parliament to disallow its decisions, this can be changed with further legislation. The Constitution empowers the parliament to decide what politicians are paid.

It is often argued that if you “pay peanuts, you get monkeys”. Yet the quality of MPs is hardly rising. Certainly, they are not world-class. The diversity of life experience among MPs continues to narrow. Nobody has stellar opinion-poll ratings.

Salary is not the only barrier to successful leaders outside politics seeking election to parliament. Other factors such as media scrutiny, the parties’ rigid factional systems and living away from home for nearly half the year are as important as salary, if not more.

The truth is that most ministers who lose their jobs rarely gain another outside parliament that pays the same salary and entitlements or comes with a commensurate level of responsibility.

Indeed, the vast majority of MPs earned less money before they were elected to parliament and will earn less when they leave.

There are, of course, many politicians who work hard, are dedicated to their jobs and believe in politics as a noble and honourable profession. They are not in it for the money.

But politicians, in deciding to pay themselves such exorbitant salaries and entitlements, are their own worst enemy. Recent scandals involving MPs who claimed entitlements to attend weddings, visit investment properties or build a book collection that included comics and novels, are beyond what the public views as morally ethical.

Last week, the Australian National Audit Office announced a new audit into the Department of Finance’s administration of parliamentarians’ travel entitlements. It is one of many inquiries and reviews in recent years. But administration of MPs’ entitlements is only one area ripe for reform. If the government is serious about weaning Australians off the public teat, then the best place to start is with politicians’ generous salaries and entitlements. Australians lead the world in what we pay our politicians. A three-year wages freeze, if not a reduction, and a curbing of entitlements is a good place to start.