Our top civil servants are being paid exceptionally well by international standards and much more than our Prime Minister, let alone the ministers to whom they are answerable. Time for change, Rex Patrick says.

When I first tweeted about departmental secretaries’ salaries back in late 2023, the tweet had 450,000 views, and it prompted News Corp to run a piece right around the country entitled “Million dollar club”.

by Rex Patrick

Scrutiny of these top cat bureaucrats’ salaries over the past two years, and articles by this and other news outlets, led to a Bill being introduced in the Senate – the Remuneration Tribunal Amendment (There for public service, not profit) Bill. The purpose of the Bill is to put an end to the culture of obscene entitlement at the top of the Commonwealth bureaucracy.

“It’s complicated” is the typical answer by those defending the high salaries. But is it?

The head of the Department of the Prime Minister and Cabinet gets over $1 million a year and the Secretaries of the Department of Foreign Affairs and Trade, Defence and Home Affairs are not far behind at $960,000. In fact, there’s only two departmental heads earning less than $900,000. All earn significantly more than our Prime Minister, who is on $608,000.

These are extremely generous salaries and entitlements by international standards.

US Government departmental secretaries, who head up much larger agencies with much bigger budgets, under US law, get less than half those salaries. They are limited to US$250,000 or around $403,000.

The Bill that is currently before Parliament seeks to limit the salaries of these public officials, which you pay, to that of the Federal Treasurer.

The first point of argument to retain these huge salaries is that they’re set by an independent remuneration tribunal.

But the fact of the matter is that the Remuneration Tribunal operates in secrecy, and so far as any outside observer sees, they wander into a room, add a consumer price index number to last year, then leave the room.

The Community and Public Sector Union (CPSU), which represents federal public sector workers, states that the tribunal’s determinations are “often succinct with limited detail” compared to the determinations made by the Fair Work Commission for the Annual Wage Review. After publishing its research, seeking public input, and holding public hearings, the Fair Work Commission produces a highly detailed report explaining its decision.

The CPSU argues that,

the decisions of the Remuneration Tribunal rarely have any connection with broader public sector wage policy.

The CPSU points out that right across the top of the public service, the Senior Executive Service enjoys successive wage increases that substantially outpace those of everyday public servants. The gap between those at the top of the bureaucratic tree and those on the branches below has steadily grown.

The second claim made in defence of million-dollar salaries is that secretaries must be paid in line with the broader business leadership market in Australia. But that is a highly questionable proposition.

Almost all secretaries are selected from within the public service. They are chosen from a Senior Executive Service made up of officers who have carefully and cautiously climbed the public service ladder, bobbing their heads and adjusting their views to suit the government of the day.

There is no real competition when it comes to the selection of secretaries.

Another area of difference with the public sector is the nature of the job. All CEO’s must have skills in the generation of income and make careful choices on how to spend that income to achieve a company’s current and future objectives, all whilst returning a profit.

Secretaries know little about generating money. Their money simply arrives on their doorstep every May in the form of a budget. Sure, there are fights within government for a share of the budget pie, but that’s at the margins, and the ultimate responsibility rests with Ministers in Cabinet, or rather, the select few of the Expenditure Review Committee.  And, at the end of the day, there is often very little feedback between money spent and whether current objectives are achieved.

There is absolutely no evidence available to suggest any problem recruiting well qualified, experienced and capable departmental secretaries at a more realistic and modest salary. Most public servants enter the service to do good. Sitting at the top of a very good bunch of people involves power, prestige and plenty of perks such as regular air travel coupled at the front of the aircraft with a complimentary QANTAS Chairman’s Lounge membership.

Unlike CEOs in the private sector, secretaries can get away with poor performance and retain their golden salaries. As we’ve seen recently, it takes a Royal Commission to end a secretary’s career (e.g., Kathryn ‘Robodebt’ Campbell) or exposure of serious misconduct (Mike Pezzullo).

Perfunctory performance does not result in harm or dismissal.

Nowhere more prominent is this accountability vacuum that in Defence, where consistent mismanagement results in consistent project failures … and promotion follows.

Andrew Podger, Honorary Professor of Public Policy at the Australian National University, reminded everyone in his submission to the Senate Committee that there is a 20% loading built into a secretary’s salary to compensate them for the loss of tenure that occurred when a contract system was brought in in 1991.

How out of touch is that sort of loading? Who exactly gets one of those?

Secretaries have an amazing redundancy package. The Tribunal, inexplicably, nominates compensation in their determination “for a termination 12 months or more before the end of the Secretary’s term of appointment—12 months’ reference salary at the time of termination”. A million-dollar payout for loss of job!

In their approach to setting such high salaries, the Tribunal thinks that secretaries have a high market rate, but then grant them a redundancy that assumes they’ll struggle to get a job in the event of termination.

This writer was recently at a social function at Parliament House and leaned over to mention the Bill to a senior Cabinet Minister. The Minister responded, “I agree that secretaries are paid too much, but what do we do about it”.

“Pass the Bill” was my response.

As regular Australians struggle with the cost of living, secretaries swivel at the top of a greasy bureaucratic pole, far removed from the daily lives of the vast majority of Australians. There’s no cost-of-living crisis for them.

How can any of them appreciate the struggles of the average Aussie family when they are rolling in taxpayer-funded cash? Less than 1% of Australians earn more than $350,000 a year, and they’re all members of that club.

It’s this vast gap of experience and understanding that spawned Robodebt and let that scandal grow for years without action.

No public servant should be earning more than our Prime Minister or Treasurer, who both bear huge responsibilities and can suffer from limited tenure when the electorate, or their political colleagues, turn on them.

Even when comparing apples and apples, our departmental secretaries get paid far too much. The US Secretary of Defence runs a department with a larger annual budget than the entire Australian Government; he gets less than half the salary of our Defence Department secretary.

Let’s hope the Finance and Public Administration Committee examines some of the arguments raised and recommends the Bill be passed. There are also some other useful suggestions made in submissions to the inquiry in the event that Senators on the committee don’t have the ticker to remedy the renumeration scandal that’s at the top of the Federal bureaucracy.

Action is needed, and a failure to address this festering issue would be an insult to the millions of hard-working Aussies who pay these senior public servants so much.

Rex Patrick is a former Senator for South Australia and, earlier, a submariner in the armed forces. Best known as an anti-corruption and transparency crusader, Rex is also known as the "Transparency Warrior."

https://michaelwest.com.au/fat-cat-salaries-and-the-secretive-remuneration-tribunal/

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