On 26 June 2020, the Tribunal made the Members of Parliament (Victoria) Annual Adjustment Determination 2020. The Determination took effect from 1 July 2020.
The full Determination and Statement of Reasons is available here:
As part of making the Determination, the Tribunal issued a notice of intention on 5 May 2020, which outlined the matters being considered by the Tribunal and invited submissions. One confidential written submission was provided to the Tribunal.
The notice of intention is available to read below.
Notice of intention
In accordance with section 24(1) of the Victorian Independent Remuneration Tribunal and Improving Parliament Standards Act 2019 (Vic) (VIRTIPS Act), the Victorian Independent Remuneration Tribunal (Tribunal) hereby publishes notice of its intention to make a Determination providing for the annual adjustments to the salaries and allowances provided to Members of Parliament (MPs) in Victoria.
The Determination will take effect from 1 July 2020.
Details of the proposed Determination are set out below.
The Tribunal invites submissions from any person or body, including any affected person, or class of affected persons, in relation to the proposed Determination. Information on how to make a submission is provided below.
What does the Determination cover?
The Determination applies to the following salaries and allowances provided to MPs in Victoria:
- basic salary
- additional salary for specified parliamentary office holders
- expense allowance
- electorate allowance
- parliamentary accommodation sitting allowance
- motor vehicle allowance
- travel allowance
- commercial transport allowance
- international travel allowance
- Electorate Office and Communications Budget.
The rates of these salaries and allowances were set by the Tribunal in the Members of Parliament (Victoria) Determination No. 1/2019.
How will the Tribunal make its Determination?
In making a Determination, under section 24(2) of the VIRTIPS Act, the Tribunal is required to consider the following matters:
- any statement or policy issued by the Government with respect to its wages policy (or equivalent) and the remuneration and allowances of any specified occupational group as defined in the VIRTIPS Act
- the financial position and fiscal strategy of the State of Victoria
- current and projected economic conditions and trends
- submissions received in relation to the Determination.
Current and projected economic trends
In recent months there has been an outbreak of COVID-19 across the world and affecting Victoria. Strict measures put in place by governments around the world to prevent or contain the spread of COVID-19 are having a significant impact on the global economy. The International Monetary Fund forecasts the global economy will contract by around three per cent in 2020 due to these measures.
The Australian Government has noted that “the global spread of the Coronavirus and its global economic impact will also flow through to demand for Australia’s exports and the availability of inputs into domestic production and imported consumption goods”. Reserve Bank of Australia (RBA) modelling, referenced by RBA Governor Philip Lowe in a speech on 21 April 2020, suggests that Australia’s Gross Domestic Product (GDP) could fall by 10 per cent over the first half of 2020. As at 30 March, the Australian Government has announced some $320 billion in economic support packages over the forward estimates, representing around 16.4 per cent of annual GDP.
Financial position and fiscal strategy of the State of Victoria
In early April, financial services company Standard and Poor’s (S&P) revised Victoria’s Triple-A credit outlook to ‘negative’ (implying that Victoria’s credit rating may be revised down in the future) because of an expected rise in public debt due to COVID-19. Nonetheless, as at 16 April 2020 Victoria’s credit rating from both S&P and Moody’s Investor Services remains at Triple-A level.
Modelling released by the Department of Treasury and Finance (DTF) which assumes stage three restrictions related to COVID-19 will remain in place for six months, shows that Gross State Product could be 14 per cent lower in the June and September quarters relative to forecasts underlying the 2019/20 Victorian Budget (2019/20 Budget). In addition, the modelling suggests the unemployment rate could increase to around 11 per cent and property prices could fall by nine per cent by the end of 2020.
The DTF modelling also suggests that the magnitude of the economic impact of COVID-19 makes it likely that Victoria will record negative economic growth in 2019-20 and 2020-21.
The Victorian Government is expected to borrow around $24 billion in emergency funding over 2019-20 and 2020-21 to support the community and businesses and to rebuild the economy following the easing of COVID-19 restrictions. This also includes $8 billion in funding for projects underway in 2020-21. This will add to Victoria’s net debt, which was forecast in the 2019/20 Budget to be around 8.3 per cent of GSP at the end of June 2020.
This funding is in addition to the $3.5 billion the Victorian Government has previously committed, which includes a $1.7 billion economic survival and jobs package offering payroll tax refunds for eligible businesses, business support grants and help to workers who have lost their jobs to find new opportunities.
The VIRTIPS Act requires the Tribunal to consider any statement or policy issued by the Government of Victoria which is in force with respect to its Wages Policy (or equivalent). The Victorian Government Wages Policy and Enterprise Bargaining Framework (Wages Policy), which applies to departments and agencies in the Victorian public sector, is reproduced below.
The Victorian Government Wages Policy and Enterprise Bargaining Framework has 3 pillars:
Pillar 1: Wages — increases in wages and conditions will be capped at a rate of growth of 2% per annum over the life of the agreement. In practice this means employee wages and conditions will be allowed to grow at this rate.
Pillar 2: Best Practice Employment Commitment — all public sector agencies will be required to make a Best Practice Employment Commitment which will outline measures to operationalise elements of the Government’s Public Sector Priorities that reflect good practice within Government and can be implemented operationally or without significant costs.
Pillar 3: Additional strategic changes — additional changes to allowances and other conditions (not general wages) will only be allowed if the Government agrees that the changes will address key operational or strategic priorities for the agency, and/or one or more of the Public Sector Priorities.
A ‘Secondary Pathway’ is also available for public sector agencies whose current enterprise agreement reaches its nominal expiry date on or before 30 June 2020 which permits one annual wage and allowance increase capped at 2.5% (instead of at 2%).
Source: Industrial Relations Victoria, ‘Victorian Government Wages Policy,’ Wages Policy and the Enterprise Bargaining Framework (State Government of Victoria: Melbourne, Victoria, 2019).
The Tribunal invites submissions from any person or body, including any affected person or class of affected persons in relation to the proposed Determination.
All written submissions should be emailed to the Tribunal Secretariat at email@example.com.
Submissions must be made by 5pm on Wednesday 27 May 2020.
If you require assistance to make a submission, please contact the Tribunal Secretariat by email at firstname.lastname@example.org.
Publication of submissions
The Tribunal may use information provided in submissions in its Determination.
All submissions will be published in full or in summary form as appropriate on this website, unless the person making the submission seeks confidentiality or the submission contains information that is identified as commercially sensitive. In this instance, the submission will be published in a form which protects the confidentiality or commercial sensitivity.
The Tribunal may remove identifying information from submissions if published.
Submissions that contain offensive or defamatory comments, or which are outside the scope of the Determination will not be published.
The Tribunal may receive a request under the Freedom of Information Act 1982 (Vic). Any such requests will be determined in accordance with that Act which has provisions designed to protect personal information and information given in confidence. Further information can be found at the Office of the Victorian Information Commissioner.