Monday, December 12, 2011


How much should we pay those who govern us?

Less than bloggers, perhaps?

This column considers the issue . . .


First, three names. Firstly, from the US and in the red (Democrat) corner, President Barrack Obama. Secondly, and in the corner that used to be red but is now a rather nice shade of rather fetching light pink, (the ALP’s) Prime Minister Julia Gillard. And finally, weighing in from Singapore, the (People’s Action Party) PM Lee Hsien Loong.

The common factor is, of course, that the parties the three pollies all represent belong to the “left” of the political spectrum, although it’s a very long time since Singapore’s PAP has been about  “redistributive wage justice”. The party claims it has a good excuse for paying its politicians so well. If voters disapproved of such pay rise, the assumption is they’d install the opposition. They don’t, therefore they approve. After all, the PAP has been the only political party to run the island state since independence although it’s worth noting that managing to exclude opponents has taken a fair degree of electoral boundary “adjustments”, combined with an enthusiastic approach to suing anyone who complains about the regime.

Secondly, three figures. $3,000,000; (US) $400,000 and finally, $470,000. Can you match the numbers to the people? Makes sense, really, doesn’t it? You’d expect that the PM of the fastest growing, economically dynamic country would be pulling in a lot more than the others. That must be the reason that it’s Singapore’s PM who's the highest paid politician of the lot.

Who’d want to be US President? You might have the ability to order global nuclear destruction if you wake up in a bad mood one morning, but there’s no money in it. It’s a wonder the free market manages to get anyone interested in the job . . . then again, perhaps it’s this lack of interest that explains the previous occupant. Or, depending on your point of departure in the political spectrum, it might help explain the current ones failings.

In Australia, political pay rises meet with bi-partisan approval. It’s only the odd pollie, here and there (like Kevin Rudd) who dares to stand up to the seemingly unanimous demand for our representatives to be properly paid (but look what happens to them). When overall economic performance hasn’t been that bad and wages are rising, this issue doesn’t attract too much angst. What’s different now is that society more generally is becoming far more unequal. The issue is simple: which group should our representatives be aligned with? The top income earners (a group they’re quite happy to be associated with) or the have nots as part of some sort of attempt to ensure their financial interests are genuinely aligned with the poorer members of the community.

And is it really reasonable to assume that Gillard should be about to come in for a big, fat pay rise that, depending on the time of day and the exchange rate – should comfortably ensure she earns more than her mate Obama? Where’s the relativity here?

From another viewpoint, of course, that’s ridiculous. But we’re not necessarily dealing with reality here. Instead, we’re inhabiting a magical world of make-believe logic; a world where you can marshal any number of cogent, persuasive and effective arguments to convince yourself of anything you want. After all, if you've ever “negotiated" your own pay rise, you know exactly what it’s like.

Let's face it. Although there’s a lot of verbiage about Key Performance Indicators, Goals that have been achieved, Relativities with other comparable individuals, and lots of other nonsense like this, none of these factors are really relevant in determining the actual remuneration anyone receives. In the public service such decisions are usually arrived at through an opaque connection between your genuine contribution to the Department and your relationship with your boss. In private industry it’s all very different. In big corporations, the amount of pay any individual worker receives is the result of an exhaustive review that takes account of the way your boss feels about you, together with your individual contribution to the company. You can spot the difference at once.

Take, for example, the other immediately obvious fact that lurches out from the above formula. The only direct and intimate relationship between remuneration and performance is the ability to gouge whatever you can from any employer. Te old days of win-win have been replaced by a new formula: win-loose. The only question is who is to be the sucker.

News that the Remuneration Tribunal is about to award a massive increase to politicians has been greeted by two reactions: immediate condemnation or, by those who’ve taken a moment to consider the massive pay rise that’s to be granted to the pollies, delayed condemnation. As Tony Abbott said, “it’s ever a good time to give a politician a pay rise”.

As usual, Andrew Leigh (one of Canberra’s two local members) helps to put this into context. The most interesting study he refers to relates to American Governors. A three-decade long analysis by Tim Besley of the London School of Economics found that the political leaders who best represented their constituents were, in fact, those who were best paid. This seems to prove the truth of the adage that if you pay peanuts; you get monkeys. It’s also a strong argument for paying politicians properly, let down, unfortunately, by only one fact.

The extra money on offer seems to make political office more attractive to lawyers: in other words, the more the job pays the more likely you’ll end up with a former lawyer in the job. And who in their right minds would want that?

And there’s the nub. We may have no problem with the PM getting properly paid – but Peter Slipper? Why should a man that just under half the parliament would probably reject for the position of independent umpire be rewarded for abandoning the Liberals with a pay rise of $70,000 that will see him taking home something like $315,000 when it’s finally announced? He will, of course, retain his Gold travel pass entitlement – although the person who is eventually elected to replace him will lose the perk. Perhaps it might be better to ask Slipper to choose. MP’s who want to move onto the new pay-scale should be entitled to. However they’d also need to be prepared to dispense with the perks they’re accumulating at the moment.

But this is all just fiddling at the edges. The reality is that the pollies pay curve since federation has been something of a ‘U’ shape. They’ve reaped the benefits of increased wage inequality, just like the plutocrats. And that’s the way it’ll stay, too. Yet perhaps that’s exactly why we should change the process for awarding them pay increases, aligning it directly with the poorest members of the community.

But pigs might fly, too.

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