Commonwealth of Australia Explanatory Memoranda

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PUBLIC GOVERNANCE, PERFORMANCE AND ACCOUNTABILITY AMENDMENT (EXECUTIVE REMUNERATION) BILL 2017

                            2016-2017




  THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA




                            SENATE




PUBLIC GOVERNANCE, PERFORMANCE AND ACCOUNTABILITY
   AMENDMENT (EXECUTIVE REMUNERATION) BILL 2017




               EXPLANATORY MEMORANDUM




       (Circulated by the authority of Senator Whish-Wilson)
PUBLIC GOVERNANCE, PERFORMANCE AND
ACCOUNTABILITY AMENDMENT (EXECUTIVE
REMUNERATION) BILL 2017

OUTLINE

This Bill seeks to establish caps on the remuneration paid to senior executives in the
Commonwealth public service as well as annual reporting requirements regarding this
remuneration.


NOTES ON CLAUSES

Clause 1: Short title

1.     This clause provides that the Bill, when enacted, can be cited as the Public
Governance, Performance and Accountability Amendment (Executive Remuneration)
Act 2017.

Clause 2: Commencement

2.       This clause provides for the Act to commence on 1 July 2018.

Clause 3: Schedule

3.      This clause specifies that each Act specified in a Schedule to this Act is
amended or repealed as is set out in the applicable items in the Schedule. Any other
item in a Schedule to this Act has effects according to its terms.

Schedule 1--Amendments

4.    Schedule 1 contains amendments to the Public Governance, Performance and
Accountability Act 2013.

Items 1 and 2

5.      Items 1 and 2 include the remuneration of senior executives within the guide
to the Act.

Item 3

6.    Item 3 defines, and identifies annualised average weekly earnings,
remuneration cap, and senior executive as terms under the Act.

Item 4

7.      Item 4 includes the remuneration of senior executives of Commonwealth
entities within the guide to this part of the Act.



                                          2
Item 5

8.     Item 5 adds Division 10 to the Act to address executive remuneration. It adds
Sections 72A, 72B and 72C.

9.     Section 72A defines the remuneration cap for senior executives of a
Commonwealth entity or a Commonwealth company, and annualised average weekly
earnings (AAWE). It sets the remuneration cap for senior executives at five times the
AAWE value.

10.     Section 72B prohibits a Commonwealth entity from paying a senior executive
more than the amount established by the remuneration cap and establishes who is a
senior executive of a Commonwealth entity.

11.      Section 72C prescribes a requirement for annual reporting by Commonwealth
entities of the remuneration of each senior executive in total, as a ratio of AAWE, and
as a ratio of national minimum wage.

Item 6

11.   Item 6 includes the remuneration of senior executives of Commonwealth
companies within the Guide to this part of the Act.

Item 7

12.      Item 7 adds two further sections to Part 3-1.

13.    Section 93A prohibits a Commonwealth company from paying a senior
executive more than the amount established by the remuneration cap and establishes
who is a senior executive of a Commonwealth company.

14.     Section 93B requires the annual reporting by Commonwealth companies of
the remuneration of each senior executive in total, as a ratio of AAWE, and as a ratio
of national minimum wage.

Item 8

15.    Item 8 stipulates that the amendments to the Act do not nullify remuneration
arrangements already in force for senior executives of a Commonwealth entity or
company.




                                            3
        STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS


 Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny)
                                    Act 2011


  Public Governance, Performance and Accountability Amendment (Executive
                          Remuneration) Bill 2017


This Bill is compatible with the human rights and freedoms recognised or declared in
the international instruments listed in section 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011.


Overview of the Bill:
This Bill seeks to establish caps on the remuneration paid to senior executives in the
Commonwealth public service as well as annual reporting requirements regarding this
remuneration.
Human Rights Implications:
Article 7 recognises the right of everyone to "the enjoyment of just and favourable
conditions of work", including "fair wages".
This Bill limits the salary payable to executives in the Commonwealth public service.
In doing so, it reduces the disparity in pay rates within the Commonwealth public
service and creates a fairer wage structure within the Commonwealth public service.
As such the Bill does not infringe any of the applicable rights or freedoms.
Conclusion:
This Bill is compatible with human rights.

                               Senator Whish-Wilson

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