Members' Additional Entitlements 2018

Overview

The Auditor-General, Margaret Crawford, today released a report on the annual review of additional entitlements claimed by Members of the New South Wales Parliament under the Parliamentary Remuneration Tribunal’s Determination. The review analysed all claims made by Members and tested a sample of claims paid for the year ended 30 June 2018 in more detail.

The review found one Member of Parliament did not materially comply with the Determination. The Member made two unsupported claims for the Electorate to Sydney Travel allowance during the year ended 30 June 2018. The Department of Parliamentary Services has asked the Member to repay these amounts. 

A further 20 departures from the administrative requirements of the Determination were identified, all relating to the timing of Members’ claims. 

The Auditor-General recommended the Department work with the Tribunal to provide more detailed guidance on the activities that meet the definition of 'parliamentary duties' and the documents Members should retain to comply with the Determination.

1. Members’ Additional Entitlements 2018

The Auditor General has reviewed the compliance of the Members of the NSW Parliament (Members) with certain requirements outlined in the Parliamentary Remuneration Tribunal's Determination (the Determination) for the year ended 30 June 2018.

The Auditor General's review is designed to provide Parliament with limited assurance about Members' compliance with the Determination. We analysed all claims made by Members during the 2017-18 financial year and tested a sample of transactions that we identified as having a greater risk of non compliance in more detail. Our sample included claims submitted by 60 of the 140 Members.

Results

Our review identified two instances of material non compliance with the Determination for the year ended 30 June 2018 relating to one Member. The Department of Parliamentary Services (the Department) has asked the Member to repay the unsubstantiated claims.

One Member claimed the Electorate to Sydney Allowance but was not able to evidence on two occasions that the travel related to the Member's parliamentary duties.

We identified 20 other departures from the administrative requirements of the Determination, all of which related to the timing of Members' claims:

  • 2 Members submitted their reconciliations for the Sydney Allowance after the due date
  • 5 Members who had elected to receive their Sydney Allowance as an annual payment, returned their unspent Sydney Allowance to the Department after the 30 September 2018 due date
  • 5 Members' claims were not submitted to the Department for payment within 60 days of receipt or occurrence of the expense
  • 1 Member claimed the Electorate to Sydney and General Travel Allowance before they travelled in three instances
  • 5 Members submitted their annual loyalty scheme declarations after the due date. Their declarations stated that loyalty scheme benefits accrued using their parliamentary allowances and entitlements were used not for private purposes.

During our review, we noted instances where it was unclear:

  • whether the Member's activities validly related to their ‘parliamentary duties’
  • which documents Members should retain to evidence compliance with the Determination.
Recommendation
The Department work with the Tribunal to provide additional guidance to Members to clarify:
  • the definition of ‘parliamentary duties’
  • the activities that meet the definition
  • requirements for retaining documents.

Background

The Parliamentary Remuneration Tribunal (the Tribunal) determines the salary and additional entitlements of Members of NSW Parliament (Members), which are set out in the Tribunal's annual Determination.

Overview of Members' Entitlements

Members Additional Entitlements

Members are reimbursed for some costs associated with performing their parliamentary duties. This includes the cost of travel and communication with the constituents of their electorate. 

The Department also pays for some expenses associated with Members performing their parliamentary duties on their behalf. This includes electoral staff salaries and the cost of leasing electoral offices. 

The Determination classifies additional entitlements into allowances and fixed allocations. 


Annual Basic Salary, Other Salaries, and Expense Allowances

Paid to Ministers and certain other office holders, as set out in the Determination and Schedule One of the Parliamentary Remuneration Act 1989 as varying percentages of their basic salaries.

The NSW Parliament, through the Department, administers paying additional entitlements to Members in accordance with the Tribunal's annual Determination. In 2017-18, Members claimed additional entitlements of $22.1 million, a decrease of 3.9 per cent from 2016-17. The decrease is largely attributable to a change in how staff are allocated to Members. From 1 July 2017 Members’ entitlement to claim the cost of additional temporary staff as an additional entitlement was abolished. Instead, Members of the Legislative Assembly are now entitled to one additional staff member in each electorate office. This change decreased claims for Members' additional entitlements in 2017-18 by $900,000.

We did not test Members’ compliance with the Determination for the following additional entitlements:

  • Travelling Allowance for Recognised Office Holders, as Members did not claim for reimbursement allowed under this allowance in 2017-18 or 2016-17

  • Electoral Allowances and Committee Allowances, as the Determination excludes these allowances from the scope of this review

  • Equipment, Services and Facilities Fixed Allocation, as the Department made payments for services and facilities directly to suppliers and staff in 2017-18.

The following table shows the amounts claimed by Members’ for additional entitlements included in the scope of our review.

Members' claims for additional entitlements
    2017-18 Increase from 2016-17
Allowance Sydney Allowance $1.8m 1%
Fixed allocations Electorate to Sydney travel $623,000 6%
Communications Allowance $8.5m 4%
General Travel Allowance $919,000 21%

Detailed findings

Material findings

One Member could not support that two claims for the electorate to Sydney Allowance related to their parliamentary duties

Claims for Members’ electorate to Sydney travel must relate to parliamentary duties. Members must retain records to support that the travel related to their parliamentary duties. On two occasions, one Member claimed travel costs but was unable to provide evidence that the travel related to their parliamentary duties. The Department has requested the Member return the amount they claimed.

Other findings

Two Members submitted their Sydney Allowance reconciliations late

The following diagram shows that with mid year reconciliations due on 31 January 2018, member 1 submitted on 16 February 2018. With year-end reconciliation due on 31 July 2018, member 2 submitted on 16 August 2018.
Source: Department of Parliamentary Services.

At the start of each financial year, a Member can choose to receive the Sydney Allowance as either an annual fixed amount, or at a daily rate for each required overnight stay. As shown in the table below, almost half of the Members entitled to the Sydney Allowance elected to receive their allowance as an annual fixed amount for the year ended 30 June 2018. These Members must submit reconciliations twice a year to the Department and return any excess of the Allowance over the actual expense by 30 September each year.

Year ended 30 June 2018 2017 2016
Legislative Assembly      
Members receiving entitlement on an annual basis 22 20 19
Members receiving entitlement on a daily rate 21 22 25
Legislative Council      
Members receiving entitlement on an annual basis 6 8 8
Members receiving entitlement on a daily rate 16 16 13
 

Source: Department of Parliamentary Services.

Five Members did not return their unspent Sydney Allowance by the due date

Following their final reconciliation, Members are required to return any excess Sydney Allowance payments to the Department. Excess payments are calculated by deducting the number of nights the Member stayed in Sydney for parliamentary business from the number of nights that the Member estimated they would be entitled to the allowance at the beginning of the financial year.

Excess Sydney Allowance must be returned to the Parliament by 30 September 2018. Of the 28 Members who received the Sydney Allowance on an annual basis, five failed to return their excess Sydney Allowance (with a total value of $32,840.18) by the 30 September 2018 deadline.

While the deadline was 30 September 2018 for unspent Sydney Allowance to be returned. Member 1 returned $1495 on 3 October 2018. Member 2 returned $2500 on 3 October 2018 and another $2832.18 on 31 October 2018, Member 3 returned $12,857 and Member 4 $10,465 on 4 October 2018 and Member 5 returned $2691 on 10 October 2018.
* Member 2 returned their excess Sydney Allowance receipts in two payments.
Source: Department of Parliamentary Services.

The Determination allows the Department to suspend the annual entitlement for Members who fail to return their excess Sydney Allowance and revert these Members to the daily rate basis. All five Members returned their excess Sydney Allowance before the Department acted to suspend their annual entitlement.

Five Members submitted their claim for reimbursement after the due date

The Determination requires accounts and Members' expense claims to be submitted to the Department within 60 days of receipt or occurrence of the expense. Our sample of claims identified five instances where Members submitted their claims between 15 and 97 days late. Late submission of claims only disadvantages the Members themselves, as it delays the reimbursement of their claims.

One Member claimed private vehicle travel costs before they were incurred

The guidelines provide a basis for Members to claim reimbursement for private vehicle travel for the Electorate to Sydney and General Travel Allowance. Reimbursement is in accordance with the Australian Tax Office ‘cents per kilometre’ method. As Members do not ‘incur’ this expense until travel has occurred, Members cannot claim reimbursement before the travel takes place. One Member made three claims for private vehicle travel two days before they undertook the travel.

Five Members completed their annual loyalty / incentive late

At the end of each financial year, Members must declare they have not used loyalty/incentive schemes benefits accrued from their parliamentary duties for private purposes. The Determination requires current Members to complete declarations by 31 July 2018, and former Members to complete declarations within 30 days of leaving Parliament. 

This year, records maintained by the Department continue to show all Members completed their annual declarations. However, five Members submitted their declarations between seven and 66 days late.

The following table shows that 22 members did not complete an annual declaration by year ended 30 June in 2014 while 5 did not in 2015, 1 did not in 2016 and all completed in 2017 and 2018.
Source: Department of Parliamentary Services.

The Guidelines would benefit from increased clarity

Under the Determination, Members can only claim expenditure incurred performing their parliamentary duties. The Determination provides examples of circumstances where additional entitlements may be used for ‘parliamentary duties’ and references to the Department's guidelines. However, we noted instances where it was unclear whether the Member's activities validly related to ‘parliamentary duties’ as described in the guidelines. 

Enhanced public reporting of Members' expenditure claims

In 2016, the Auditor General's Report to Parliament recommended the Tribunal consider requiring the Department to regularly publish full details of Members' expenditure claims on its website in an accessible and searchable format.

The Tribunal had developed a plan requiring greater public reporting of Members' additional expenditure from 1 July 2019. In November 2018, the Crown Solicitor advised the Tribunal that it does not have the power to require the Department to facilitate greater public reporting.

The Annual Reports of the Legislative Assembly and the Legislative Council, published on the Parliament's website, currently list the total amount claimed during the year by each Member for each allowance. However, transparency around Members’ claims would be enhanced if information was more extensively and regularly published on the Parliament’s website. The Department should continue to work with the Members, the Clerk of the Parliaments and the Clerk of the Legislative Assembly to enhance reporting of Members' expenditure.