Controversial pay rise to gift state MPs or their spouses pension boost

The windfall pay rise that could be directed to former Victorian MPs was an “unintended consequence”, Premier Daniel Andrews says. It comes amid rising anger from public sector unions, which have been fighting for pay rises of more than 2 per cent.

Victoria’s pollie pay debacle has deepened with revelations more than 200 former state MPs or their spouses will have taxpayer-funded pensions boosted by thousands of dollars.

The Herald Sun can reveal some ­retired or dumped pollies, and spouses of deceased MPs, will be among the winners from the controversial pay-rise decision gifting Premier Daniel Andrews an extra $46,522 a year.

This is because ex-MPs elected before 2004 and who served at least eight years in state parliament are part of a pension scheme linked to a backbench MP’s base pay — which has soared more than $10,000 since July.

In a further embarrassment, the Andrews Government will now have to change the law to ensure the Premier and other senior MPs who are also on a generous defined-benefits ­pension scheme are not showered with even more cash when they retire.

Mr Andrews said this morning that the independent tribunal had identified an “unintended consequence” that former MPs could get a “windfall gain” from the new pollie pay determination.

The controversial pay-rise decision saw Daniel Andrews made the highest paid premier in Australia. Picture: Mark Stewart

“There’s been a problem highlighted by the tribunal, the independent umpire, and we will take the necessary steps to deal with that,” he said.

But he said the defined benefit payments received by former MPs had always been linked to the salary of current backbench MPs.

Mr Andrews again defended the independent umpire’s decision but said he knew it would “always lead to criticism”.

Asked if the generous pay rises passed the pub test, the Premier said he was “not a commentator on these things” but agreed that MPs were “well paid for the work that we do”.

“I think we were all surprised but that was always going to be the case,” he said.

The controversy has enraged ­public sector unions who are fighting for pay rises of more than 2 per cent a year, with some slamming the ­Andrews Government yesterday for a “blatant double standard on wages”.

Amid rising anger from the unions, Mr Andrews said he was happy to sit down with union bosses to discuss the issue.

He said there were “clear pathways” to delivering pay rises to public servants above the government’s 2 per cent wage cap, if productivity improvements were also made.

“There are ways in which staff could receive a higher pay rise than that, but there would need to be trade-offs, there would need to be a whole range of reforms which came with that,” Mr Andrews said.

Things could get uglier next year, when the new Remuneration Tribunal hands down another ruling on MP pay that could see backbench salaries rise for the third time in a year.

Mr Andrews quietly slipped into Shepparton yesterday, where he defended Tuesday’s decision by the “independent umpire” making him the highest-earning premier in Australia.

“I have had no involvement in this, no member of parliament has had any involvement in this,” Mr Andrews said.

Parliamentary figures confirmed there are 163 former state MPs who will see their pensions boosted by Tuesday’s controversial increase.

Michael O'Brien sparked fury when he defended the salary package. Picture: AAP Image/Daniel Pockett

Another 44 recipients are spouses of deceased MPs.

The revelations that hundreds of ex-MPs will also benefit will further anger public sector unions.

Opposition Leader Michael O’Brien — who will cash in on an 11.8 per cent pay rise, along with Mr Andrews and ministers — infuriated colleagues by going on morning radio to ­defend the Premier’s package as “quite a reasonable amount”.

“Compared to federal MPs, I don’t think what state MPs are getting now is unreasonable,” Mr O’Brien said.

Some MPs on lower pay rates are grumbling about a 3.5 per cent boost, which one described as “a chicken bone chucked over the fence” by those on ministerial packages.

Cabinet members are set to enjoy pay increases worth $37,102 a year from next July, which Police Minister Lisa ­Neville said yesterday was “probably is on the higher end of what I had ­expected”.

This will also increase the pension payments of serving ministers and MPs first elected before 2004, such as Ms ­Neville and Mr Andrews.

Under a defined benefits scheme, those 19 MPs get an annual payment — or a lump sum when they retire — based on their length of service, the positions they held and the current backbench salary.

Serving mps on the defined benefits pension scheme

However, the Herald Sun has learnt they would have been in line for an even bigger payout because of the way their base salary is now treated.

Legal advice shows the current MPs, who are on a second-tier pension system, may have had their base pay benchmarked at $182,413 rather than $168,901 off the back of the new ruling.

To ensure this doesn’t happen, Special Minister of State Gavin Jennings will have to change the law to clarify the lower figure is to be used.

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Community and Public Sector Union state secretary Karen Batt reported “white hot” fury from her members.

She said she had written to Mr Andrews after she was “flooded with calls and emails” from members angry at a decision which “undermines (pay) bargaining as we know it”.

Police Association secretary Wayne Gatt said it was “difficult to reconcile” the government’s 2 per cent wage clamp on public servants with the pay rise MPs were gifted.

Mr Andrews refused to back away from the government’s wages policy yesterday, but said he would “negotiate in good faith” for a “fair outcome for all of our employees”.

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