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ANNUAL REPORT AND DETERMINATION OF ADDITIONAL ENTITLEMENTS FOR MEMBERS OF THE PARLIAMENT OF NEW SOUTH WALES by the PARLIAMENTARY REMUNERATION TRIBUNAL pursuant to the Parliamentary Remuneration Act 1989
31 MAY 2002

PARLIAMENTARY REMUNERATION ACT 1989

REPORT PURSUANT TO SECTION 13(1) OF THE ACT

1. INTRODUCTION

Section 11 of the Parliamentary Remuneration Tribunal Act 1989 ("the Act") prescribes that the Parliamentary Remuneration Tribunal ("the Tribunal") shall make an annual Determination as to the additional entitlements for Members and Recognised Office Holders (as defined under the Act) on or before 1 June in each year or on such later date as the President of the Industrial Relations Commission of New South Wales determines.

Section 13 (1) of the Act requires that the Tribunal make a report to the President of the Industrial Relations Commission of New South Wales for each Determination made by the Tribunal. The President is then required, as soon as practicable after receipt of the report, to forward it to the Minister (see section 13(2)).

On 15 March 2002 the Tribunal commenced proceedings in relation to the annual Determination required for the year 2002 by writing to all Members and inviting submissions.

The Tribunal received submissions from the Presiding Officers, the major political parties and some individual Members. The Tribunal also met with those Members who specifically requested to meet and discuss their submissions. The meetings proved very useful for the Tribunal in gaining a greater understanding of the matters raised.

Because of the diverse range of matters canvassed in the submissions the Tribunal does not intend to discuss all in their entirety. As has been the previous practice the Tribunal has made changes to the Determination without the need for detailed separate reasons being provided. Such changes reflect, in general, minor wording changes to give greater consistency to the Determination.

In a number of cases the submissions have repeated matters previously raised without providing any additional information for consideration by the Tribunal. Where the Tribunal has dealt with such matters in earlier Reports and Determinations no further consideration has been given in the present review.

The submissions have, however, also raised a number of substantive issues which, in the Tribunal's view, merit further consideration.

2. GENERAL MATTERS RAISED

Record Keeping Requirements

The Tribunal has been advised that the level of detail contained in the Determination coupled with the administrative arrangements to give effect to the Determination has resulted in an unacceptable level of record keeping by Members, way beyond what could reasonably be expected to meet the accountability requirements of the Act and the Determination. In part this has been attributed to the Guidelines the Tribunal includes in each Determination.

The current format of the Determination was first introduced in the Tribunal's 2000 Determination. The reasons for this were state in the 2001 Report (p4)

"...it must be noted that the 2000 Determination does contain a significant amount of detail as to the administration and management of the scheme for additional entitlements. This has been brought about, in part due to the legislative requirements which impose a greater degree of accountability on Members. It has also come about because of specific requests for the Presiding Officers to introduce new rules and guidelines which, on the one hand, are designed to enhance accountability and/or transparency in the use of entitlements by Members and, on the other, seek to have the Tribunal simply resolve a range of what might be described as ordinary administrative issues.

The Tribunal is of the view that it is not its role to determine the minutiae of each entitlement. The Tribunal's role is to determine the rules and guidelines which meet the statutory need and community expectation for accountability and transparency in the use of public funds. It is then a matter for the Presiding Officers to develop the administrative policies which are consistent with those rules. As the Tribunal stated in the 2001 Report (p4):

"In many instances, once the conditions applicable to particular general entitlements and conditions have been determined administrative procedures in relation to these matters should be left to the Presiding Officers who are the administrators of the scheme. For example, the Tribunal has required that Members provide evidence of their attendance in Sydney on parliamentary business to receive the Sydney Allowance. It has, however, left the type of evidence required at the discretion of the Presiding Officers to give effect to this rule."

Members must accept that a higher level of record keeping is now essential to meet the increased accountability standards. The level of detail required to meet those standards was left to the Presiding Officers. If these standards are proving onerous, difficult to manage or are considered by Members to need simplification then it is a matter for discussion with the Presiding Officers in the first instance. For its part, the Tribunal would be prepared to assist, provided the overall integrity of the entitlements scheme is not compromised.

Interpretations of the Tribunal's Determinations.

Since the making of the 2001 Determination the Presiding Officers have, on occasion, sought interpretations from the Tribunal whether Members can use their Logistic Support Allocation (LSA) for the purchase of particular items which are not contained in the List of items and services contained at page 16 of the 2001 Determination.

In addition the Presiding Officers, as part of their 2002 submission to the Tribunal, provided a list of items and services which they had approved as appropriate expenditure under the LSA. These items included, newspaper and journal purchase, advertisements for staff, company searches, transport and freight charges and photography. The Tribunal agrees that the goods and services itemised on the list submitted by the Presiding Officers are appropriate activities for which the LSA can be used. The Tribunal does not propose to add these items to the List contained in the Determination.

One of the reasons why capped budgets were introduced was to avoid prescriptive lists of goods and services. The Legislative basis of the scheme is that Members are provided with additional entitlements to facilitate the efficient performance of parliamentary duties.

The requirement that Members manage their LSA provides them with greater flexibility to expend their entitlements as is appropriate to their particular electorate or constituent needs. It is up to Members to determine how best to serve their constituents. Because Members' needs are varied, diverse and in some cases exclusive, the compilation of an ever growing list of "approved goods and services" will not serve any useful purpose or meet every Members' needs. For this reason the Tribunal has provided guidelines on the types of items or services for which the LSA can be used and has prepared an indicative list of the types of items and services that may be procured from Members' LSA accounts. The list is not exhaustive but it is not intended to be used as an ever increasing list of approved items.

The Tribunal is of the view that Members should exercise the necessary fiscal discipline to use their entitlements for the purposes which they were intended. There is sufficient oversight of the entitlements scheme and severe sanctions for Members who misuse their entitlements.

Provided Members can satisfy statutory requirements that expenditure was for parliamentary duties and provided they have sufficient funds in their LSA then they should be given the flexibility to decide upon what goods and services they should spend their allocations. The Tribunal will be clarifying this in the Determination.

By adopting this approach, questions such as whether country based Members can use their entitlements to install 1800 numbers or whether Members can use their funds to pay for morning tea for school children visiting Parliament or purchase particular types of software, do not require the approval of the Tribunal. Decisions such as these should be left to Members. It would then be up to the Member to justify the expense as being for parliamentary duties. If there are matters for which Members do require clarification then the Presiding Officers should provide the relevant clarification. The Presiding Officers, for example, are best placed to determine which personal development courses are appropriate for Members to undertake and fund from their LSA.

There are, however, matters that the Tribunal will need to consider in detail. These matters deal with procurement of equipment and, in particular, computer equipment. The Tribunal does not intend to limit the equipment a Member can purchase but rather limit the amount that can be expended on such equipment given the Treasury's requirement on how such items are to be treated for accounting purposes. The Tribunal has been informed that computer purchases of $5,000 and over are treated as Capital items that require different accounting mechanisms.

The current scheme places the onus on Members to ensure they exercise appropriate financial discipline and manage their affairs within their budgets. A key feature of the scheme is that each Member is provided with an annual budget. Members are given flexibility to expend funds within that budget and also to use their electoral allowance if there is a shortfall. They are also able to carry forward unspent amounts from their LSA to subsequent financial years.

The Tribunal has made very clear that if Members over-expend their entitlements there will be no supplementation. Under no circumstances can Members borrow against future allocations, not only because it is not a sound accounting practice, but because there is no future allocation from which a Member could borrow.

Shadow Ministers

The Tribunal has again received submissions seeking additional staffing resources for Shadow Ministers and additional staff for Legislative Council Members.

The Tribunal determined additional entitlements for Shadow Ministers for the first time in the 2000 Annual Determination. The Tribunal's view at that time was that:

"...Shadow Ministers do serve a critical function in a parliamentary democracy and it is the Tribunal's view that they should be eligible for additional entitlements to carry out the extra workload inherent in such positions."

The Tribunal determined that Shadow Ministers should receive additional Travel and Printing and Stationery entitlements.

For the 2001 annual review submissions regarding Shadow Ministers revolved around additional entitlements and, in particular, additional staff. It was contended that Independent Members had an additional Member of staff whereas Shadow Ministers were not provided with additional resources notwithstanding their additional responsibilities.

The Tribunal considered the submissions but made no changes to entitlements, in part because no quantifiable data was provided to substantiate claims for additional travel warrants or additional Logistic Support Allocations.

In respect of additional staff, however, the Tribunal noted that:

"...In order to assess the submissions made in relation to this matter the Tribunal has examined the duties and obligations of Shadow Ministers when compared with Independent Members. It is apparent, from that review, that, prima facie, an anomaly exists between staffing levels afforded Shadow Ministers and those afforded Independent Members. However, given the relative paucity of submissions received in support of this claim, it is difficult to determine precisely the extent of such anomaly and what specific relief should be given to rectify it.

There are a range of issues which need to be addressed in order for the Tribunal to resolve this issue. The first question which arises is what is the appropriate number of staff to be provided to the Shadow Ministry. Should Shadow Ministers be provided with one staff Member each or a pool of staff (less than a one for one allocation)? In addition, there are related issues such as appropriate remuneration for such staff and a question as to their accommodation. Finally, a question arises as to the appropriate operative date for any staff changes.

In the result the Tribunal it would not seem realistic to make a Determination on this matter in the annual Determination. An alternative course may be to have the matter considered as a special Determination. Should such a special Determination be required the Tribunal will seek submissions at that time. However, whether or not a special Determination is made there is nothing to preclude the Government from providing these additional resources in a manner similar to the approach for Ministers and the Leaders of the Opposition. In any event, the Presiding Officers and Shadow Ministers should discuss the claim in relation to the issues raised above."

Submissions for the current review have again sought additional staff for Shadow Ministers but again insufficient information has been provided to support a Determination at this time.

In 2001 the Tribunal recommended that a special reference be given to the Tribunal to review this matter thoroughly. Such a reference was not provided. The Tribunal considers that a strong prima facie case exists for the provision of additional staff to Shadow Ministers. Accordingly, the Tribunal will write to the Premier to provide such a reference. In this regard the Tribunal notes that the Presiding Officers have also supported a special reference in regard to additional staff for Shadow Ministers. At the same time the Tribunal could also review the staffing arrangements for Members of the Legislative Council.

While the Tribunal is prepared to undertake such a review, it does reiterate that the Presiding Officers and/or the Government can provide additional resources to Members or Shadow Ministers. Section 15A of the Act provides that:

(1)	Nothing in this Act is to be construed as preventing Members or recognised office holders from being provided with entitlements apart from this Act, including for example:
	(a)	offices and facilities at Parliament House, or
	(b)	offices and facilities for Ministers elsewhere, or
	(c)	travel by Ministers.

3. REVIEW OF ADDITIONAL ENTITLEMENTS

Electoral Allowance

The Tribunal received submissions seeking an increase in the Electoral Allowance over and above the normal Consumer Price Index (CPI) movement to compensate for the decrease in the number of electorates. No quantifiable data has been provided to substantiate the level of increase being sought.

The Tribunal reviewed this matter in its 2001 annual Determination and decided that a specific increase to compensate for the smaller number of electorates was unwarranted. The Tribunal noted that it:

"... has also considered submissions dealing with a variety of other matters such as the reconstitution of electorates. However, these considerations need to be balanced against the already substantial averaging undertaken in the assessment of the electoral allowance and the contentions advanced by Members as to potential losses occasioned by any repayment provisions in relation to the electoral allowance.

The Tribunal concluded that it was prepared to consider, on a case by case basis, any particular circumstances which might warrant an adjustment to electoral allowances for a particular Group or Zone.

Such circumstances would need to be supported by conclusive documentary evidence that the electoral allowance is insufficient for the purposes for which it is provided.

The Tribunal has not received information which would warrant an increase in electoral allowances on this occasion. In future the Tribunal intends to examine closely the use of the electoral allowance and will be seeking from Members details of the types of expenses and amounts to substantiate any future increases.

Sydney Allowance

The Tribunal received a number of submissions from Members in respect of the Sydney Allowance. Some submissions contended that the Sydney Allowance should be increased in recognition of increased costs and to reflect comparable overnight travelling allowances to Sydney. Suggested rates range from $210 to $259.40 for overnight stays.

As noted in the 2000 and 2001 determinations, the Sydney Allowance is set at a rate lower than comparable overnight travelling allowances to Sydney. In those determinations the Tribunal outlined the historical underlying principle governing the determination of this allowance:

"...members will be required to spend a considerable period of time each year in Sydney on parliamentary business, and as such should be making longer term accommodation arrangements. The rate determined is lower than the ad hoc overnight rate (where commercial hotel accommodation is envisaged), because it is expected that Members will find cheaper accommodation when in Sydney."

In recent determinations, the Tribunal has made adjustments to this allowance based on movements in the CPI. The rate was increased by 2.1 per cent in the initial determination, 3.2 per cent in the 2000 determination and a further 6 per cent in the 2001 determination.

As with previous submissions Members have complained about the inadequacy of this allowance but have provided no details of actual costs incurred to substantiate their claims.

There are approximately 65 Members from both Houses who are eligible to receive the Sydney Allowance, each of whom makes his/her own accommodation arrangements. To ensure the Tribunal has more meaningful data upon which to consider the adequacy of the Sydney Allowance, the Tribunal will, for the 2003 review, seek the assistance of the Presiding Officers to obtain details of the types of accommodation arrangements Members make while staying in Sydney. In the meantime the Tribunal will continue the previous practice and increase the Sydney Allowance by the Consumer Price Index ie 2.9 per cent.

Logistic Support Allocation (LSA)

The Tribunal introduced the LSA in 2000 as a means of grouping a broad range of entitlements formerly available to Members in various forms. To simplify these entitlements the Tribunal determined a monetary value for each entitlement and grouped them into four broad areas of activity. Each Member was allocated an LSA account to which various expenditures incurred under the four broad areas would be debited.

LSA budgets were based on electorate Groupings for the Legislative Assembly and Zones for the Legislative Council. Budgets were based on actual expenditure figures obtained from the Legislature.

Members were given the flexibility to use the LSA to meet their particular needs in the performance of their parliamentary duties. Members are able to carry forward unspent entitlements and may manage the funds as they deem appropriate. Accountability and transparency in the use of the LSA are provided through the rules imposed by the Tribunal including an annual audit requirement.

Assessment of future increases was to be based, in part, on actual expenditure obtained from the Legislature. Figures were not available for the 2001 review hence the Tribunal relied in part on CPI movements in the various LSA categories which resulted in an increase to the LSA of approximately 9 per cent.

For the 2002 annual review the Tribunal received numerous submissions as to various aspects of the LSA. Many of the changes sought by the Presiding Officers and individual Members concerned particular conditions applicable to various components of the LSA. Where the Tribunal has considered such changes do not alter the substance of the Determination the Tribunal has made the changes without further comment.

Submissions were received supporting an increase in travel allowances for Members. The increase sought was to bring Members travel allowance rates in line with those for the NSW public sector.

Members are currently entitled to claim actual meal and accommodation allowances when travelling on parliamentary duties. The Tribunal has set an upper limit of $203 per night in capital cities and $131 per night for other areas. This amount is lower than the current public service rates and as such, where a Member travels on official business with a member of his/her staff, the staff member is entitled to claim a higher rate of travel allowance than the Member.

The Tribunal notes that the Premier's Department publishes from time to time travel allowance rates for officers in the public sector and that the rates are higher than those available to Members. The Tribunal considers this a genuine anomaly and will amend the Determination to ensure that the upper limit of travel allowance that can be claimed by the Member is consistent with rates applicable in the NSW public sector.

Submissions to the Tribunal have also sought increases to the quantum of the various components of the LSA. The submissions have provided what the Tribunal can only consider anecdotal evidence to support such claims. No quantifiable data was provided upon which the Tribunal could make a reasoned decision.

At the specific request of the Tribunal, the Legislature was able to provide annual LSA expenditure figures for Members based on Electorate Groups. These figures relate to the 2001 calendar year and all electorate Groups show under-expenditure in the LSA. The same has occurred with the Legislative Council Members.

On the basis of this advice the Tribunal does not consider that an increase in the LSA is warranted. Whilst the Tribunal accepts that with a total of 145 Members there will always be a few for whom the allocation is insufficient, the Tribunal does not consider this as justification to provide a general increase for all Members, particularly when no information has been provided as to the circumstances which have led to such over-expenditure. The Tribunal reminds Members that they may use their electoral allowance to overcome any potential shortfall.

Electorate Mailout Account

Following a special reference from the Premier, the Tribunal determined that Members of the Legislative Assembly should be provided with an Electorate Mailout Account to communicate directly with their constituents biannually.

The Tribunal's Determination included the full year allocation and is included in this Determination. Because of the specific conditions applicable to this entitlement it is inappropriate to include it as part of the LSA. The Electorate Mailout Account will form a separate and new entitlement with its own unique conditions and rules. It will also be subject to the general conditions applicable to Members' entitlements.

Committee Allowance

The purpose of this Allowance is to remunerate Members servings as Chairpersons on Committees for the extra time and effort required to carry out this role. In previous Determinations this allowance has been increased in line with Members' salary increases.

There has been no increase in Members' salaries since 1 July 2001 therefore, in accordance with normal practice the Committee Allowance has not been increased.

Reimbursement of Expenses for Charter Transport for Members of the Legislative Assembly

Electorate charter transport allowances for Members of the Legislative Assembly were reviewed in 1999 and 2000 when the Tribunal provided for increases of 2.1 per cent and 3.2 per cent respectively to reflect general increases in the CPI. This year, in response to submissions received, the Tribunal has undertaken a review of these costs.

As part of this review, the Tribunal has undertaken a survey of fees charged by air charter transport operators. The results of the survey indicate that since 1998, when such a survey was last conducted, fees have increased by approximately 20 per cent. Air charter operators have attributed the large increase to the impact of the GST and increased fuel, insurance and landing costs. The Tribunal also notes the overall decline in rural commercial air services in NSW.

Having regard to the above, including previous increases based on CPI, the Tribunal has determined that an increase of 15 per cent is warranted in the maximum amount reimbursable for charter transport for Members of the Legislative Assembly. Actual amounts and conditions applying in respect of charter transport allowances are specified in the annual Determination.

Travelling allowances for Recognised Office Holders and Shadow Ministers

The Tribunal has undertaken a review of the travelling allowances paid to Recognised Office Holders and Shadow Ministers. The Tribunal's Determination is based on those rates provided to NSW Public Servants and those deemed "reasonable" by the Australian Taxation Office. In accordance with conditions applicable to other NSW public officials, Recognised Office Holders and Shadow Ministers will only be able to claim actual expenditure for absences from Sydney or their usual place of residence where an overnight stay is involved.

For absences that do not involve an overnight stay Recognised Office Holders and Shadow Minister may claim reasonable actual expenses. The Tribunal has provided indicative upper limits for travel expenditure. It is proposed that these allowances will be adjusted annually in line with movements to the public sector rates.

Electorate to Sydney Travel Warrants

The Tribunal has received submissions seeking additional electorate to Sydney travel warrants. The reasons provided centre on the increased Committee work by Members, which requires them to be in Sydney more often than has hitherto been the case. Again, no quantifiable data was provided to the Tribunal to substantiate the need for additional warrants, nor were any details provided as to how many Members were affected.

At the commencement of each financial year the non-metropolitan based Members are provided with 104 single journey air travel warrants for the purposes of travelling to and from Sydney to attend Parliament and for other parliamentary duties. The allocation is sufficient for a Member to make a return trip to Sydney for each week of the year.

The Tribunal has obtained details from the Legislature on the use of electorate to Sydney travel warrants by Members. Based on these figures, which indicate that the vast majority of Members have ample warrants for the rest of the current financial year, the Tribunal sees no reason why the allocation should be increased.

The Tribunal reminds Members that if their warrants are insufficient for their needs then they can use the LSA or their electoral allowance to meet the shortfall.

Under existing arrangements Members can drive from their electorate to Sydney in lieu of using their air travel warrant. Members surrender a travel warrant and receive appropriate mileage rates.

The Presiding Officers have requested that where a Member does drive to or from their electorate (or Zone in the case of Legislative Council Members) the amount that can be reimbursed for such travel should be limited to the cost of the appropriate commercial flight.

The Tribunal has considers this request as reasonable and will be making the appropriate adjustment in the Determination.

4. SUMMARY OF 2002 DETERMINATION

Electoral Allowance	No increase
Sydney Allowance	2.9 percent increase (CPI)
Logistic Support Allocation	No increase
Electorate Mailout Account	No increase
Committee Allowance	No increase
Electorate Charter Allowance	15 per cent increase.
Travel Allowances	Increased generally to Public Sector rates (actual costs only)

Significant Changes to Conditions

• Cost of travel from electorate to Sydney limited to the value of commercial flight (air warrant).

• Greater flexibility in types of expenditure allowed under the LSA.

• Staff travel costs can be met from LSA.

• Increase in limit for purchase of minor office equipment from $2,000 to $2,500.

• Purchases of Computer hardware limited to $4,999.

Dated this 31st day of May 2002

The Honourable Justice R Boland