Pollie welfare plan: push to pay ex-MPs for up to 18 months while they search for new jobs

A radical proposal to pay former state MPs a backbench salary for up to 18 months while they look for other work could cost taxpayers up to $4.29 million a term.

A radical proposal to pay former state MPs a backbench salary for up to 18 months while they look for another job could cost taxpayers up to $4.29 million a term.

As revealed by the Saturday Herald Sun, a plan for taxpayers to fund ex-parliamentarians during their job seeking has been submitted to the state’s political pay-setting tribunal as part of this year’s MP salary review.

The submission was made by Deakin University researchers who were commissioned by former MPs and the Victorian parliament to assess “transition to life after parliament”, and found that many people turfed out by voters struggled to get employment.

They recommend a six month payment based on a basic MP salary – worth $192,000 a year – and then up to two further instalments if no work was found in the first six months.

If a new job was found, the former MP would have to contact the parliament to cut off the payment.

Modelling in the submission says that if there was a high turnover of MPs after an election, it would likely cost $4.05m in separation payments.

However, the group modelled what would happen if there was a 20 per cent “behavioural response” where MPs “choose to wait the full 6 months until they resume paid employment”.

This would push the cost up to $4.29m.

Victorian Premier Daniel Andrews. Picture: Valeriu Campan

The existing payment scheme costs about $3.5m when there’s a high turnover of MPs.

Modelling was also done for a new scheme of six-monthly payment set against average worker earnings, rather than an MP’s rate of pay.

This shows an overall cost of about $2.08m with a high turnover of MPs, with behaviour change.

Despite the much lower cost of the scheme when it was based on average worker wages, the recommendation sent to the remuneration tribunal was for the separation payments to be benchmarked against a backbencher’s salary.

The report by the Deakin academics used interviews with former MPs to substantiate the claim.

It said many ex-parliamentarians had mortgages or children, and that the mental anguish of losing a seat made it difficult to job hunt straight away.

“Applying for jobs is also very time-consuming, especially, as many respondents recounted, they were applying for up to three or four positions per week, often over many months,” the report says.

“Recipients of the current separation payment were very thankful, despite the fact that for many it did not see them through to securing employment, even when they scrimped and saved.

“This again demonstrates the need to restructure the separation payment to become more needs-based, because ‘if you can’t get a job because you’ve been an MP … there needs to be just some sort of safety net’.”

The pollie welfare proposal is based on Deakin University research, commissioned by the Victorian parliament and its former member’s association. Picture: Janine Eastgate

EX-MP PAYMENT PLAN

The recommendation for a new resettlement payment would give former MPs the equivalent of six months of their salary – worth about $96,000 today – when they lose their seat or resign at an election.

Those payments would be “terminated” once the ex-pollie secures paid employment.

But if they remain jobless they could apply for a further two rounds of the $96,000 stipend, provided they could prove they have been actively searching for work – similar to requirements for federal jobseeker recipients.

There would also be exemptions for former MPs who have “medical, mental health or caring responsibilities that preclude them from obtaining employment”.

The radical proposal is now before the Victorian Remuneration Tribunal, which sets pay for politicians, at the same time as the panel considers how much to hike MP salaries this year.

Backbenchers are currently paid about $192,000 a year, while Premier Daniel Andrews has a package worth about $465,000 – the highest of any state leader in Australia.

A submission from Greens Leader Samantha Ratnam to the tribunal says a pollie pay rise “should not exceed 1.5 per cent given our generous base salary and the public sector wage cap that the Victorian Government has imposed on the rest of the Victorian Public Service”.

The remuneration tribunal is likely to consider the government’s wage cap policy, which has since been increased to 3 per cent a year, as well as a range of factors including inflation and general wages growth.

Last year, the tribunal granted state politicians a pay bump of 2.75 per cent – equivalent to a $5000-a-year hike for backbenchers.

Greens Leader Samantha Ratnam believes the pollie pay rise should not exceed 1.5 per cent. Picture: Ian Currie

In 2021, most MPs pledged to donate increases to charity following a backlash over their pay packets rising while businesses battled through lockdowns.

The proposal to increase “separation payments” for former MPs is likely to spark controversy.

The Deakin University researchers say that current payments for state politicians who lose seats after a single term, which is set at three months basic salary or about $48,000, is simply not enough.

If MPs lose their seats after two terms or more in office, they get six months’ salary.

The researchers say six months’ salary should be the minimum payment and that the separation scheme should be based on need, not time served.

Their survey of 93 former MPs found 53 per cent took at least six months to find a job after leaving parliament, while 29 per cent took between six and 12 months, and 12 per cent took 18 months of more.

It found that most MPs, regardless of their positions, recounted “a period of physical and mental exhaustion after their time in parliament as a result of the high demands of the job”.

A one-term former MP told the researchers that after four years out of the normal workforce there is a “stigma” attached to CVs because of a political career and that “public service ruins your life”.

Another “estimated that they applied for at least 100 jobs in 12 months before securing a role that paid less than half their backbench salary”.

The timing of elections in November was also cited as a reason for change, because the job seeking market winds down over Christmas and the New Year.

A separate submission to the remuneration tribunal, by the Speaker and President of the parliament, argues for the retention of a generous allowance for regional MPs staying in Melbourne overnight during sitting weeks.

They say the allowance provides country-based politicians “the certainty of having accommodation which they can utilise when the need arises for them to be in Melbourne”.
The tribunal has been considering phasing out the allowance in favour of a separate travel expense scheme.